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And that's why retirement plan practitioners avoid consulting on healthcare! Thank you Brian for being the healthcare guru for this forum, when reading a question I can always tell when it will elicit a Brian answer.

Yeah for medical there are the ACA prohibition of rescission rules to grapple with. In short, those do not permit a retroactive termination of coverage unless the employer can show fraud or intentional misrepresentation of a material fact--plus the plan has to provide 30 days' advance written notice. There are some exceptions (e.g., late divorce notification, COBRA processing delays), but generally employers will avoid attempts to retro term medical in general because in most cases it's not permitted. Even where there is an argument the recission is permitted, it's a practical challenge to recover paid claims from an employee. State wage withholding law probably won't allow repayment through payroll without the employee's authorization, and without sending the employee to collections (always fun for employee relations) there's not a great way to recover when the employee ignores a demand for repayment. Most often this issue comes up where an employee loses eligibility (e.g., reduction in hours, termination of employment), but the employer mistakenly fails to timely process their termination of active coverage (and offer COBRA). The ACA prohibition of rescission rules are clear in that scenario that a retro term is not permitted. More discussion if you're interested: https://www.newfront.com/blog/terminated-employees-not-terminated-coverage-2

If the loans were distributed as a benefit offset, then there's nothing to repay. The plan would have discharged the loans. If they were "only" deemed distributions, then the notes still "exist" and the sponsors could get some tax basis by repaying them with all the accrued interest.

From the phrasing of the original question, "we" appears to be a TPA (or something similar). As @Peter Gulia states, your service agreement will be the first place to start. He also (correctly) implies that the action of the TPA may be guided by its own attorney, who will also pay attention to the comments/advice from the plan's attorney. Those are not the same person. I would never expect to "go to the wake and see the deceased." (My Dad was cremated.) One other way to consider "proof of death" might be whether there is a published obituary. (Sorry, I don't know if fraudulent obits are a thing.)

Just to give you a way to think about this as you prepare to get your lawyer’s advice: Relying on the plan administrator’s and trustee’s instructions about the service you’re asked to do might be enough if : you’re a nonfiduciary service provider; your service agreement releases you from liability for following instructions; your service agreement indemnifies you from liabilities and expenses from your having followed instructions; and your indemnitors have enough money to make good their promises. But if you are or your affiliate is a fiduciary (of whatever kind), one might consider a cofiduciary’s responsibility regarding what another fiduciary does or fails to do. Beyond whatever the plan’s administrator considers about its responsibility to the plan, the surviving spouse might want her lawyer’s advice about whether it’s unwise to be too quick to pay medical expenses from the accident. (Who caused the car accident: the decedent, or someone else?) This is not advice to anyone.

You may consider doing a little more research to clarify the situation. You mention that the plan has a pooled account. It is possible that the loans were treated as an investment of the plan and not treated as a loan earmarked from a participant's account. If a loan is treated solely as an investment, then it was a bad investment for the plan but not a distribution to the participant. It is unlikely this was the case, particularly since the CPA issued 1099Rs, but it could have been how the loans were issued. The terms and promissory note for the loans should help clarify this. What code did the CPA put on the 1099Rs? If it was code L, then the loans were reported as a deemed distribution and the loans continue until they are repaid or offset. If it was code M, then the loans were reported as offset and the loans ceased to exist. Keep in mind that for an offset to occur, the funds would have to be available for a payment from the plan either as a withdrawal, RMD or distribution at the time of the offset. You also may want to see if and how the loans were reported on the 5500. Were they included in or excluded from the assets? If they are included in the assets, that would support an argument that the loans continue to exist. If they are excluded, that doesn't support an argument that they do or do not exist. Consider the direction in which the preponderance of the evidence points (deemed or offset) before they deposit anything into the plan.

Are you using the option to disaggregate otherwise excludable employees from testing? If so, the employees who haven't met 1 year of service (i.e. those who aren't eligible for profit sharing contributions) wouldn't need to receive the gateway minimum. In general, the definition of compensation used for allocations does not dictate the definition of compensation used for testing. You can use any allowable definition of compensation for testing.

Understood. I still don't fully understand the facts here with how the loss of eligibility occurred per my note above, but I think I get enough of it to weigh in. I always advise that an ineligible individual has to be removed from the plan whenever notice is provided, even if notice is provided late. I do not advise that an employee has to continue paying the employee-share of the premium for an ineligible individual once removed from the plan. I view that as an ultra-purist reading of those §125 irrevocable election rules--and perhaps a violation of applicable state wage withholding law. So I would recommend moving this to the employee-only payment tier once the ineligible dependent is removed. Note that if I understand the scenario correctly, this isn't a HIPAA special enrollment timing window issue--that applied to the dependent's initial enrollment based on adoption or placement for adoption. This is a Section 125 cafeteria plan question you're raising on the employee's failure to timely make permitted election change event request based on a loss of dependent eligibility change in status even (presumably set at a 30-day window in the plan terms).

Do one VCP to cover both.

Here is some information from the DOL about retrieving forms earlier than 2009: If you are unable to find a filing that you believe has been submitted, please contact the EFAST2 Help Desk at 866-463-3278. Form 5500 Bulk Image service provides bulk downloading of filed Form 5500 Annual Returns in PDF Format. This service is intended to be used by developers who would write scripts to automate the downloading of files. For plan years 2008 and prior, this service includes the images (including forms, schedules, and any attachments) of the filing. For 2009 and later plan years, this service provides the images (attachments) and populated facsimiles (forms and schedules) of the filing. For access to the Form 5500 bulk image service, email foiarequest@dol.gov with the subject "EBSA Form 5500 image service request" and provide your contact information in the body of the email.

Many of you know that BenefitsLink is headquartered in the mountains of North Carolina. Thankfully, we're safe and sound, albeit without cell service and primary internet (thank goodness for StarLink!). Many around us are not. We know that Florida and Georgia experienced significant damage. The mountains of North Carolina and Tennessee took a devastating hit. Over 2' of rain fell in a large swath of the NC mountains; the runoff put rivers at historic flood levels. Power, cell and internet service are all down over a large area, roads are collapsed or otherwise impassable, and many homes and small towns are completely isolated -- or washed away. Two of the four interstate routes in/out of Asheville -- the two that cross the mountains to the west -- have washed out; a third route (to the east) is blocked in several places. The damage is almost unbelievable -- and the affected area is almost the size of Massachusetts. This area is not equipped or prepared for this level of catastrophic destruction. Mountain people are self-reliant survivors, both individually and collectively, but this will be quite a stretch. It will be a long, difficult road forward. Please keep all in this area in your thoughts and prayers. And if any of our BenefitsLink neighbors have been affected, please reach out on this thread - we'll do what we can to help. Lois and Dave