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Might I propose that you articulate your query forthwith, and rest assured that an appropriate interlocutor shall furnish you with a cogent and satisfactory response—ideally accompanied by a brief exposition of the real-world conundrum you seek to resolve.

I believe DFVC is capped at $1,500 for a small plan (you did not mention); just hurry up and file before client gets a DOL letter.

Plan document will have that spelled out, whether the match compensation is determined on the whole year, pay period to pay period, and/or only from one's participation date in the source.

Neither the Code nor the Treas Regs under 72(p) require that loan repayments be accelerated at termination of employment. In addition, neither require that loan repayments must be permitted to after termination of employment. Hence, the need for the election you have noted. If the plan documents permit, loan repayments may continue to be made by the participants. But, previously loan repayments would have been made via payroll reduction and they would no longer be able to done this way. This would be require arrangements to be made with the recordkeeper for direct repayment via check or electronic payments such as ACH deduction from a participant’s bank account. That said, in the past, most plans and/or their recordkeepers wouldn’t, couldn’t, or just didn’t want to, go through the administrative expense of working with individual terminated participants on repayment arrangements (just as @Lou S. is saying), so they would require immediate payment upon termination of employment. Nowadays, recordkeepers are less reluctant (and plans seem to be neutral if the recordkeepers are okay with it). This is simply a contractual restriction of the plan and/or recordkeeper—again, it is not a legal restriction. However, the terms of the plan, loan policy documents or promissory notes must conform with the contractual loan restrictions. If they don't, the plan sponsor could be violating the Truth in Lending Act. Plan loans are loans (i.e., ERISA does not pre-empt the Truth in Lending Act rules that may be applicable). Also, if this box is checked or unchecked, the choice will affect how this loan is treated and whether a loan offset can be used. If this alternative is checked in the adoption agreement, the plan and the recordkeeper would not and could not permit terminated employees to continue to pay off outstanding loans, and the loan would be immediately due and payable upon termination of employment. Here, unless the outstanding loan balance is pre-paid (most plans or plan loan policies permit pre-payment) or paid within 90 days of termination, the outstanding loan balance would be reported as taxable income to the participant on a 1099-R. This is your loan offset. Unless an exemption applies, the outstanding balance would be subject to the 10% early withdrawal penalty. If the loan was in good standing on the termination of employment date, the participant could rollover the outstanding loan balance to another qualified plan or IRA (they would have to fund the rollover with their own funds) to avoid taxes and penalties, but the rollover would have to occur prior to the due date (including any extensions) for their tax return for the year of the loan offset. If the due and payable alternative is not checked in the adoption agreement (and the plan loan policies and any applicable promissory notes do not provide for acceleration of repayment), the employer would be violating the terms of the plan and likely the Truth in Lending Act, if it does not permit them to continue repaying the loan after their termination of employment. That is, the plan would not have a right to accelerate payments, to do a loan offset or to cause the loan to be defaulted (if they are willing and able to otherwise repay).

I think it depends on whether you want the Plan to be a loan collection and processing agent for ex-employees or you want that loan off the books ASAP when a participant terminates.

This is an illegal exclusion unless the plan provides a 1000 hours fail-safe. In other words, the plan must provide that, regardless of the excluded class, a part-time employee who actually works 1000 hours enters the plan. Given that, the plan should satisfy the coverage test when using the option to disaggregate otherwise excludable employees.

I question whether it is possible for a plan to fail coverage the way you have described. Show the numbers for the test.

This would be viewed as failing to withhold deferrals from eligible plan compensation, which is considered an operational error and more specifically a missed deferral opportunity (i.e., plan participants missed an opportunity to defer amounts under the plan). The first method available to correct this error would be to provide the affected participants (1) a corrective contribution in the form of a qualified non-elective contribution (QNEC) that’s equal to 25%-50% of the missed deferral amount, plus (2) if the affected participant is eligible for matching contributions, 100% of any missed matching contribution determined using 100% of any missed deferral amounts (not the reduced 25-50% amount) plus (3) any investment earnings what would have been earned on the contributions made under (1) and (2), if any. It is likely the percentage used for the corrective QNEC will be 50% as it appears that the error may have started a while back, but it could be less if it has only been occurring for a short period. If corrected in this manner, the employer should be able to self-correct even if it has occurred for a long period of time, but that would only be if it meets the rules for self-correcting inadvertent failures. Otherwise, it would only be able to be self-corrected if the error has only been occurring for less than about two years. The other method to correct the error would entail adopting a retroactive plan amendment to conform the plan document terms to the plan’s operation using an amended comp definition excluding the items you enumerated from the plan’s new comp definition for the period at issue. If the employer chooses to correct through retroactive amendment, the correction would need to be to submitted to the IRS under VCP. To get the IRS to agree to the retroactive amendment under VCP the employer would need to explain the expectations of the affected plan participants with regard to these excluded items (here, that they did not expect these items to be included for salary deferrals and matching contributions, if any). This would have to be shown by submitting SPDs, election forms, data statements or summaries of benefits, statements, notices, employee communications, new hire enrollment materials, or any other documents that indicated that these comp items would be excluded for plan contribution purposes. If the employer does not have any documents to submit showing that the participants were informed that these comp items would be excluded, it is unlikely that the IRS would agree to the retroactive amendment and it would likely require contributions be made as described above. Note that retroactive amendments can be used to self-correct but only in instances where the retroactive amendment would increase the benefits for the affected participants. That would not be the case here. There could be another correction the employer could propose if a VCP is submitted... under VCP the employer can propose anything it is just whether the IRS would accept what is proposed (not sure what they would propose but maybe they can come up with something). Also, note that since 2022 VCPs cannot be submitted on an anonymous basis (though you could ask for a pre-submission conference to discuss a potential VCP submission without disclosing the employer’s name, etc. but those conferences are advisory only and non-binding). as usual, this is not advice....

The tax treatment of the distribution cannot control/deny someone of future participation. However, it can affect tax treatment of future distributions. If the person takes a permissible LS (total distribution) under the terms of the plan and applies NUA, then any future distribution attributable to future participation would be precluded from using such. I would not think such would retroactively negate the prior NUA treatment but would seek qualified tax counsel for that. I would also be EXTREMELY careful on distribution timing, what constitutes a lump sum and future participation. I think you would need to avoid any contribution after the distribution but in the same tax year as such that creates a balance at year end. Get qualified tax counsel and/or financial planning assistance AND understand your plan's rules and it's administrative environment as any misstep could prove expensive.

Exactly. Also, a person who works <1000 in first 12 months but >1000 in next computation period (as plan defines) should participate on next entry date, but the language as crafted would exclude that person, impermissibly. Find out exactly what the plan sponsor is looking to accomplish, reconcile that with the law, and then clean up the language for them.

The loan only has to be capped at 50% of the vested balance at the time of origination. The "loan first, hardship second" approach is acceptable and common, actually.

I'd say not so much 90 days, but as of the end of the cure period for the missed payment (of the entire due/payable outstanding balance) under the plan's policy, often the end of the following quarter.

And doing them all at once is the least costly option as the max amount is based upon filing with the DOL not forms.

It sounds like they are trying to say that Part-Time Employees are excluded, but a PTE that works 1,000 hours in the first year or 500 hours in 3 consecutive years will not be excluded. My concern with this language is that the 1,000 hours is limited to the first year and the 500 hours for LTPTE is 3 consecutive years which was later changed to 2 consecutive years. Is it also applied to all contributions? Is there another provision limiting LTPTEs to deferrals?

A § 401(a) retirement plan does not count § 457(b) deferrals in § 415 annual additions. For example, an individual in her early 60s might have 2026 retirement savings like this: (I assume my estimates of inflation-adjusted limits for 2026.) 457(b) deferral $36,500 (salary $40,000 as a retired government employee) 403(b) elective deferral $36,500 (salary $40,000 from a university lectureship) 401(a) nonelective $90,000 (compensation $360,000 as a 50% owner) $163,000 Observe that the § 401(a) plan’s annual additions do not count against the § 403(b) account’s annual-additions limit. 26 C.F.R. § 1.415(f)-1(f)(2)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.415(f)-1#p-1.415(f)-1(f)(2)(ii). In my experience, many government employees also have other employments and other businesses. This is not advice to anyone.