KJohnson

For what its worth, the EBIA ERISA Compliance Manual's view based on "discussions with DOL" is that absent a wrap DOL will consider each insurance policy a separate plan.

No you could do it through a 125 plan from a tax standpoint--but not through the FSA. You would have a separate premium reimbursment feature. Where you got into trouble are with things like HIPAA discrimination, COBRA, state small group rules etc. where the individual policy might then be considered employer sponsored and wouldn't comply with the varous mandates. Of course after ACA you can't do individual Exchange policies through a 125 plan.

Agree with the above. Also, always be sure to look at the plan asset rules. In certain instances if the LP is not an operating company the underlying assets of the LP would be considered plan assets and you woud not only hae to deal with the initial investment itself, but also PT issues on the underlying assets.

The EBIA ERISA Compliance Manual for Health and Welfare Plans has both the wrap SPD and the Plan document templates. There is always debate about whether one document can "double" as both espeically post-Amara. But if you do try and combine them you need to have both the requirments of a plan and the requirements of an SPD in them and you need to recite that it constitutes boththe Plan and the SPD.

Are you dealing with "can' or must take a distribution. If you are dealing with the non-discretionary involuntary distribution of vested balances under $5K, then I think things are pretty wide open. For example as long as you stick with the $5k "ceiling" you can raise and lower it without violating 411(d)(6). This is from the regulations... (v) Involuntary distributions. A plan may be amended to provide for the involuntary distribution of an employee's benefit to the extent such involuntary distribution is permitted under sections 411(a)(11) and 417(e). Thus, for example, an involuntary distribution provision may be amended to require that an employee who terminates from employment with the employer receive a single sum distribution in the event that the present value of the employee's benefit is not more than $3,500, by substituting the cash-out limit in effect under § 1.411(a)-1 1©(3)(ii) for $3,500, without violating section 411(d)(6). In addition, for example, the employer may amend the plan to reduce the involuntary distribution threshold from the cash-out limit in effect under § 1.411(a)-1 1©(3)(ii) to any lower amount and to eliminate the involuntary single sum option for employees with benefits between the cash-out limit in effect under § 1.411(a)-1 1©(3)(ii) and such lower amount without violating section 411(d)(6). This rule does not permit a plan provision permitting employer discretion with respect to optional forms of benefit for employees the present value of whose benefit is less than the cash-out limit in effect under § 1.411(a)-1 1©(3)(ii).

If the vendor is the current investment provider to the terminating plan you might want to google "capturing rollovers" and look at some of the articles. I think there was a pretty detailed one by Fred Reish last year. Also search for GAO Report: "Labor and IRS Could Improve the Rollover Process for Participants" that also raise issues in this area of capturing rollovers.

Derrin's book says you have to credit and that despite other practitioners belief he thinks this requirement is "clear."

http://www.supremecourt.gov/opinions/12pdf/11-1285_i4dk.pdf

B and D woudl appear to be in a parent subsidiary group. I think you need to look at the affililated service group rules as well and do an A-Org, B-Org, and management function group analysis.

I think there is at least one if not two PLRs that come to this conclusion. But, the only person that can rely on the PLR is the one who receives it.

At the 2010 ASPAA conference the IRS said that using a 414(s) definition for 403(b) deferrals should be pemissible. Documents do provide bonuses as a permissible exclusion-- such as Metlife

I assume she doesn't do any work for the S Corp. If she works at their house I don't think she would be employed by a trade or business so the controlled group/comon control rules would not come in to require to be be included in any coverage testing. Look here.... http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&n=129 BTW you need 50 employees for a QSLOB

You might look here.... http://www.google.com/url?sa=t&rct=j&a...d97bHgxxFuLg8Ww http://ebn.benefitnews.com/news/on-site-cl...-2721550-1.html http://www.shrm.org/publications/hrmagazin.../0112legal.aspx http://www.google.com/url?sa=t&rct=j&a...linics%20legal%

Masteff Are you sure? I though that generally an on-site medical facility would be an ERISA welfare plan. The one exception is a clinic that provides treatment only for minor illnesses or injuries or first aid for on-the-job injuries (See, ERISA Reg. § 2510.3-1©(2)). I thought that if you provided things such as annual physical examinations, wellness visits, primary care etc. you could not fit under this exemption and be an ERISA goverend plan (or part of an ERISA governed plan).

I think this is an area where even the IRS is confused. I think it is an overpayment under EPCRS and has to be corrected with the method stated in the Rev. Proc. The American Benefits Council apparently agrees and wrote a letter to the IRS regarding these type of overpayments back in 2010 askng for a change to EPCRS... http://www.appwp.org/documents/epcrs_comme...etter041610.pdf Here is that part of that letter.... The Council believes that the repayment requirement where, notwithstanding the employer’s reasonable steps, the employee does not repay the overpayment is too punitive in some circumstances. In many situations, for example, where the employer is making ongoing employer contributions, the repayment requirement is essentially meaningless. The employer would have made the same contribution regardless of the overpayment failure and the repayment is merely a formality. In contrast, however, correction where a plan does not have ongoing employer contributions may be punitive. The employer or plan service provider would be obligated to make a corrective contribution equal to the amount of the overpayment plus interest. This contribution could not, however, be used to offset future contributions, and it is far from clear how the corrective contribution may be used other than through a windfall allocation to participants. This may arise, for example, in a plan that solely provides for elective deferrals or in a plan that is frozen. For these reasons, the Council suggests that the repayment requirement be eliminated. It has virtually no significance in contexts where there are employer contributions against which the corrective contribution may be offset, and it is punitive in contexts where there are no ongoing contributions. We appreciate that a correction that merely involves notice that the distribution is not eligible for rollover and reasonable efforts to secure repayment may strike some at Treasury and the Service as too gentle. However, the current system is untenable and we see few palatable alternatives. It is better to err on the side of fairness than to create an arbitrary and punitive correction method simply to deter potentially abusive behavior, i.e., systematically disregarding the in-service distribution restrictions. This is particularly true given the existing protections in EPCRS which make the program unavailable for egregious failures. Interestingly, however, Avaneesh Bhagat, Program Coordinator for the Employee Plans Voluntary Compliance stated in a phone forum that he didn't think a corrective employer contribution was neccessary in such a situation. http://www.irsvideos.gov/EPCRS The next category of issues deals with broadly improper distributions, and we'll illustrate one scenario but really it could be anything. Here you have a situation where the distribution was made to an employee because it was thought that the employee terminated employment with the employer. However, it turns out that the employee did not sever from employment and the employee simply transferred from one employer in the control group to another. So really what you have is a distribution that was made from an employee's account balance in violation of plan terms. What causes confusion in this area often is that a distribution that's made in violation of plan terms falls within the revenue procedure's definition of overpayments, which generally deals with the erroneous distribution of excess amounts to a participant. So within the overpayment correction you have two issues: one, that distributions that were made from an employee's account balance in violation of plan terms; and another, which is the more common one, a distribution made to an employee that was in excess of what an employee was entitled to under the terms of the plan. Under both of those scenarios, whether it's a distribution from account balance in violation of plan terms or an excess amount distributed to the participant, you would take the following step. The employer would make a reasonable attempt to recover amounts distributed. The employer would in effect notify the employee of the erroneous distribution and ask for the money back. It would also inform the employee that unreturned monies are not eligible for tax favored treatment such as a rollover to an IRA. However, there is a distinction, though. If you have an erroneous distribution made from a participant's account attempting to recover monies from the participant is fine, but the employer wouldn't be required to make a corrective contribution to the plan to replenish amounts that weren't returned by the employee because the employee would get a windfall. That correction piece is generally limited to situations where excess amounts were distributed to an employee which would in effect have an impact on what other employees are entitled to. In that case the employer would then be expected to replenish the plan for unrecovered monies so that other affected employees could get what they're rightfully entitled to. That provision is not really very clear in the revenue procedure so oftentimes when you have a situation where an improper distribution is made from an employee's account that question often comes up, is the employer stuck with making corrective contributions to the plan to the extent that the employer's not successful in recovering monies from the employee? The answer to that is no, because you don't want to create a windfall situation for that employee What you propose as a correction seems reasonable but maybe an informal call before a submission would be wise. I also agree that it would create basis if paid back with after-tax dollars.

I think you remain othe the six year cycle. I think even though you are individually designed the only time you may come off the six year cycle is if you amend the plan in such a fashion so that it is a kind of plan that isn't supported by a pre-approved plan (e.g. an ESOP) or you abandon the plan alll together in the form of an individually designed plan not based on the prototype/volume submitter document, or you amend the M&P VS to such an extent that it doens't pass the IRS "smell test". Even in some of these instances you can stay on the 6 year cycle temporarily. Here is what 2007-44 section19.02 says. .02 Eligibility for Six-Year Cycle on Continuing Basis Except as otherwise provided in section 19.03 and 19.04, an employer who modifies a plan in such a way that the plan, as adopted by the employer, would not be considered an M&P plan or a VS plan, will nevertheless be allowed to remain within the six-year remedial amendment cycle due to the nature of the modifications, as described in section 24.02 of Rev. Proc. 2005-16. Thus, plan amendments (other than those described in sections 19.03 and 19.04 below) that are adopted timely and in good faith with the intent of maintaining the qualified status of the plan by employers sponsoring M&P and VS plans will be disregarded for purposes of determining an employer’s remedial amendment cycle. In this case, the employer will remain eligible for the six-year remedial amendment cycle. Thus, the plan will continue to be treated as an M&P or VS plan for purposes of this revenue procedure and therefore eligible for the six-year remedial amendment cycle on a continuing basis as provided in section 24.02 of Rev. Proc. 2005-16. Here is what 24.02 of 2005-16 says: .02 An employer that has adopted an M&P plan or a VS specimen plan may have modified the plan in such a way that the plan, as adopted by the employer, would not be considered an M&P plan or a VS plan. Nevertheless, such a plan will generally be treated as an M&P or VS plan and will be allowed to remain within the six-year remedial amendment cycle. Notwithstanding the above, if the employer has amended the plan to incorporate a type of plan not allowable in the VS or M&P program, whichever is applicable, (for example, to incorporate an ESOP, which is not allowed in either the M&P or VS program) the employer’s plan will be considered to be an individually designed plan for purposes of this revenue procedure. In that case, the remedial amendment cycle in which the employer impermissibly amends the VS or M&P plan will remain the six-year remedial amendment cycle until that cycle expires. However, the subsequent remedial amendment period is the five-year remedial amendment cycle.ain in the 6 year cycle. But they can still stick you with the 5 year cycle if you go to far afield with your amendment to the M&P or VS. This is from 19.04 of 2007-44 04 Ineligibility for Six-Year Cycle Notwithstanding the above, if an employer amends an approved M&P plan including its adoption agreement or an approved VS plan to such an extent that the Service determines in its discretion that the plan falls under section 24.03 of Rev. Proc. 2005-16, then the plan will be considered individually designed for purposes of this revenue procedure (that is, the employer will be subject to the applicable five-year remedial amendment cycle based on the last digit of their EIN). The same rule applies if the employer adopts an amendment described under section 19.03(3) and (4) above within one year of adopting either the M&P plan or the VS plan. Here is 24.03 of 2005-16 .03 Notwithstanding any of the above provisions in .02, the Service may in its discretion determine that such a plan is an individually designed plan that will not receive an extended remedial amendment cycle, due to the nature and extent of the amendments. To round it all off, here are the plans that can only stay on the 6 year cycle temporarily. This is 19.03 of 2007-44 oc. 2005-16. .03 Temporary Eligibility for Six-Year Cycle An employer who adopts an individually designed plan under (1) or (2) below or makes certain amendments to its M&P or VS plan as described under (3) and (4) below is entitled to remain in the six-year remedial amendment cycle only for the current remedial amendment cycle. This temporary eligibility for the six-year cycle applies if: (1) the employer is an intended adopter (as described in section 17.04) and after timely executing the Form 8905, the employer decides to adopt an individually designed plan whose underlying plan document is not based on a pre-approved plan, or (2) the employer is a prior adopter of a pre-approved plan (as described in section 17.02) and after adopting this pre-approved plan the employer replaces that plan with an individually designed plan whose underlying plan document is not based upon a pre-approved plan document, or (3) the employer amends an approved M&P plan, including its adoption agreement, to incorporate a type of plan not allowed in the M&P program (and that amendment is adopted more than one year after the date the employer initially adopted the M&P plan (see section 6.03 of Rev. Proc. 2005-16)), or (4) the employer amends an approved VS plan to incorporate a type of plan not allowed in the VS program (and that amendment is adopted more than one year after the date the employer initially adopted the VS plan (see section 16.02 of Rev. Proc. 2005-16)); In order to obtain reliance, such employer must submit a determination letter application during the approximate two-year period within the six-year remedial amendment cycle that the Service announces for employers to adopt plans and submit them for determination letters. The employer’s plan will be reviewed using the applicable Cumulative List based on the date of the application. The subsequent remedial amendment cycle is the first five-year cycle, as determined under section 9 or 10 of this revenue procedure that ends after the closing of the six-year cycle in which the determination letter application was submitted. However, if the end of the first five-year cycle that ends after the closing of the six-year cycle is less than twelve calendar months after the date of the favorable determination letter, then the plan’s current cycle is extended for twelve calendar months and the next five-year cycle will be shortened accordingly.

Any thoughts on the elimination of a 410(b) fail safe provision mid-year? TAM 9735001 basically states you can't change allocations for anyone who has already satisfied the allocation conditions of the Plan for the year. But with the add back you are suspending your allocation conditions--so you don't know, who, if anyone, will have to be added back. It would seem that for the first typical add back--participants who are employed on the last day of the plan year but don't have the requisite hours of service--it would not be a problem since they haven't yet satisfied the last day requirement. But what about from there? Is this an issue? If so, any other issues other than TAM 9735001

You can add this to the mix of uncertainty... http://www.ebia.com/WeeklyArchives/CourtCases/20842 /2012: Cafeteria Plan Premium Payment Did Not Take Insurance Arrangement Out of ERISA's Voluntary Plan Safe Harbor (Thomson Reuters/EBIA) "Other courts have concluded that payment of voluntary plan premiums through a cafeteria plan weighs against the safe harbor, even if not a deciding factor on its own.... In contrast, this and another recent decision ... seem to suggest that cafeteria plan use alone might not rule out the safe harbor. Nonetheless, employers considering using a cafeteria plan to collect voluntary plan premiums should proceed with caution, looking closely at other indicia of involvement and appropriately limiting their actions if the arrangement is intended to fall outside of ERISA."

You probably were thinking of something in the MEWA regulations. This is in the proposed regulations as an exemption from the MEWA reporting requirement. It might be in the existing regulations as well... (B) The entity provides coverage to the employees of two or more employers due to a change in control of businesses (such as a merger or acquisition) that occurs for a purpose other than avoiding Form M-1 filing and is temporary in nature. For purposes of this paragraph, ``temporary'' means the MEWA or ECE does not extend beyond the end of the plan year following the plan year in which the change in control occurs If you are insured, look at the policy. It may state that it only covers those actively at work for 30 hours or more. Then--big claim and the insurer denies coverage because employee not eligible under the terms of the plan/policy Self-insured you have the same concern for stop loss. This is coming up a lot more often--maybe not in this context, but in employers leaving employees on a policy when they are out of work beyond FMLA periods, expanding coverage beyond COBRA etc. The employee is not covered under the terms of the insured plan or stop loss and the employer can be left holding the bag.

Different results in different cases.... O’Leary v. Provident Life & Accident Ins. Co., 456 F. Supp. 2d 285 (D. Mass. 2006) (individual disability insurance policy with employer-paid premiums was an ERISA plan); Heidelberg v. Nat’l Found. Life Ins. Co., 25 EBC 1536 (E.D. La. 2000). New England Mut. Life Ins. Co., Inc., v. Baig, 166 F.3d 1, 22 EBC 2623 (1st Cir. 1999).See Roehrs v. Minn. Life Ins. Co., 37 EBC 2700 (D. Ariz. 2006). See also McCall v. Focus Worldwide Television Network, Inc., 46 EBC 2019 (E.D. La. 2009) (unique employment agreement providing for bare purchase of insurance policy for one employee did not demonstrate requisite employer intent to establish ERISA plan). There is this also on HIPAA https://www.cms.gov/HealthInsReformforConsu...HIPAA-00-06.pdf Finally look at 106(a) of the Code "(a) General rule Except as otherwise provided in this section, gross income of an employee does not include employer-provided coverage under an accident or health plan. " I think you are saying it is employer provided for 106 but is not employer provided for ERISA. I agree this is an area where there is not a lot of clarity.

I think in some ASPAA or JCEB Q&As a few years back the IRS may have said (informally) that payment by the employer to the provider was ok and not a contribution. But in 86-142 (in reference to brokerage commissions) they seem to have gone the other way stating: "Similarly, if instead of making additional contributions to the trust, the employer paid the brokers' commissions directly to the broker, such amounts are treated as though they had been contributed to the trust and used to provide benefits under the plan. " Rul. 86-142, 1986-2 CB 60. ISSUES (1) Are additional contributions made by the employer to reimburse the trust of a qualified plan for brokers' commissions on transactions involving plan assets deductible under section 162 or 212 of the Internal Revenue Code? (2) Are additional contributions to an individual retirement account (IRA) within the meaning of section 408(a) to reimburse the IRA for brokers' commissions on transactions involving IRA assets deductible under section 162 or 212? FACTS Situation 1. A corporation established a plan for its employees. The plan is qualified under section 401(a) of the Code and the related trust is exempt from tax under section 501(a). The plan year and the taxable year of the employer are the calendar year. The plan provides that the employer will reimburse the trust for brokers' commissions charged in connection with the purchase and sale of securities for the employees' trust. The employer, over the plan year, makes the maximum deductible contribution to the plan under section 404 of the Code. During the plan year, the employer makes additional contributions to reimburse the trust for the brokers' commissions paid by the trust. Situation 2. An individual established an IRA within the meaning of section 408(a) of the Code on July 1, 1985, and upon establishment contributed the maximum amount allowable as a deduction under section 219 for that year. Later, during 1985, the individual made additional contributions to the IRA to reimburse the account for brokers' commissions incurred in connection with the purchase of securities on behalf of the IRA. LAW AND ANALYSIS Section 162 of the Code allows a deduction for the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Section 1.162-10(a) of the Income Tax Regulations provides that no deduction shall be allowed under section 162 of the Code if, under any circumstances, the amounts may be used to provide benefits under a stock bonus, pension, annuity, profit-sharing, or other deferred compensation plan of the type described in section 404(a). Section 404(a) of the Code allows, subject to certain limitations, a deduction for employer contributions under a stock bonus, pension, profit-sharing, or annuity plan, or for compensation paid or accrued under a plan of deferred compensation, provided that such contributions or compensation satisfies the provisions of section 162 or 212. Section 1.404(a)-3(d) of the regulations provides that expenses incurred by the employer in connection with a qualified employees' plan, such as trustee's fees and actuary's fees, that are not provided for by contributions under the plan are deductible by the employer under section 162 of the Code (relating to trade or business expenses), or section 212 (relating to expenses for production of income), to the extent that such expenses are ordinary and necessary. Amounts that are not ordinary and necessary expenses are not deductible under section 162. Rev. Rul. 68-533, 1968-2 C.B. 190, holds that a sole proprietor's payment of trustee's fees that were expenses not provided for by contributions under a qualified plan are deductible by the sole proprietor under section 162 or 212 of the Code to the extent that they are ordinary and necessary. Such expenses are deductible in addition to the maximum deduction for employer contributions under the plan allowable by section 404. The principles enunciated in the regulations under section 162 of the Code are equally applicable to section 212, except that the production of income requirement is substituted for the business requirement. Section 1.212-1(e) of the regulations provides in part that section 212 of the Code does not allow the deduction of any expenses which are disallowed by any of the provisions of Subtitle A of the Code (relating to Income Taxes) even though such expenses may be paid or incurred for one of the purposes specified in section 212. Brokers' commissions are not recurring administrative or overhead expenses, such as trustee or actuary fees, incurred in connection with the maintenance of the trust or plan. Rather, brokers' commissions are intrinsic to the value of a trust's assets; buying commissions are part of the cost of the securities purchased and selling commissions are an offset against the sales price. Accordingly, employer contributions to reimburse the trust for brokers' commissions are used to provide benefits under the plan of which the trust is a part and thus are not deductible under section 162 or 212. Similarly, if instead of making additional contributions to the trust, the employer paid the brokers' commissions directly to the broker, such amounts are treated as though they had been contributed to the trust and used to provide benefits under the plan. Such direct payments thus are not deductible under section 162 or 212. Amounts contributed (or treated as contributed) to a plan are deductible subject to the rules and limits in section 404. This is the case without regard to whether the amounts are used to pay brokers' commissions, administrative or overhead expenses (such as trustee or actuary fees), or cash benefits. In situation (1), the employer's contributions to reimburse the trust for brokers' commissions are not deductible as a separate expense under section 162 or 212. Also, because such contributions result in the employer's total contributions exceeding the amount deductible under section 404 for the taxable year, such additional contributions are not deductible under section 404. Such contributions, however, may be deductible in future years under the carryover rules of section 404(a). Section 219(a) of the Code provides that there shall be allowed as a deduction an amount equal to the qualified retirement contributions of the individual for the taxable year. Section 219©(1) provides that such contributions include amounts paid by or on behalf of an individual to an IRA. Rev. Rul. 84-146, 1984-2, C.B. 61, discusses the deductibility of trustee's fees with respect to IRAs. It holds that, consistent with the rules governing deductions in connection with qualified plans, amounts paid by the IRA owner for such fees in connection with an IRA are deductible under section 212 of the Code to the extent they satisfy the requirements of that section, but that amounts paid that are not ordinary and necessary expenses, such as capital expenditures and disguised IRA contributions, are not deductible under section 212. The analysis that applies to employer contributions to a trust to pay brokers' commissions on transactions involving qualified plan assets also applies to IRA contributions. Thus, IRA contributions to pay brokers' commissions on transactions involving IRA assets and direct payments by the IRA owner to a broker for commissions on transactions involving IRA assets are not deductible under section 162 or 212. Such contributions (and payments treated as IRA contributions) are deductible subject to the limits of section 219. In Situation (2), the additional contributions to the IRA to reimburse the IRA for brokers' commissions result in the total IRA contributions for 1985 exceeding the amount that can be deducted under section 219 for 1985. The contributions that exceed the limits of that section are subject to the tax on excess contributions described in section 4973. HOLDINGS The employer contributions to the trust of the qualified plan in Situation (1) to reimburse the trust for brokers' commissions on transactions involving trust assets cannot be separately deducted as an ordinary and necessary business expense under sections 162 or 212 of the Code. Similarly, the IRA contribution by the IRA owner in Situation (2) to pay brokers' commissions on transactions involving the assets of the IRA cannot be separately deducted under section 162 or 212 of the Code.

Isn't this a complete catch-22 for ERISA plans? Let's say you use the 20 hour exclusion and then a year or so down the road someone manages to get more than 1,000 hours in a plan year. You let them defer at the beginning of the next year. Everything seems fine under the 403(b) regs and ERISA. Then, the year that you let them in they are under 1,000 hours again. The next year it appears they have to come out for 403(b) purposes because it seems like this is a test based on each plan year.... (2) For each plan year ending after the close of the 12-month period beginning on the date the employee’s employment commenced (or, if the plan so provides, each subsequent 12-month period), the employee worked fewer than 1,000 hours of service in the preceding 12-month period. (See, however, section 202(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA) (88 Stat. 829) Public Law 93-406, and regulations under section 410(a) of the Internal Revenue Code applicable with respect to plans that are subject to Title I of ERISA But, they need to stay in for ERISA purposes. But, if you let them in because of ERISA then you can't apply your 20 hour exlcusion for anyone under Sec. 1.403(b)-5(b)(4).

Look at Rev. Rul. 86-142 which talks about direct and indirect contributions in such a circustance. I would be hesitant, but still this was in Q&A- 16 of the May 2005 Q&A session between the Treasury Department and the American Bar Association. 16. §401(a) - Employer Contributions A plan sponsor decides to change record keepers. The old record keeper informs the plan sponsor that there is a surrender charge to transfer the plan assets to the new record keeper. If, instead of charging the surrender charge to the accounts of the plan participants, the old record keeper charges the plan sponsor directly, and the plan sponsor pays the surrender charge directly to the old record keeper, is the payment considered an employer contribution subject to testing under §415 and §401(a)(4)? Proposed Response: No. Since no money was deposited by the plan sponsor into the plan, no contribution has been made. IRS response: The IRS agrees with proposed response for this fact pattern, but is not willing to give a blanket endorsement to the proposed rule that since no money was deposited by the employer to the plan, no contribution has been made. It is a facts and circumstances determination whether a contribution has been made.

Did you look at EPCRS to see if this could be self-corrected as an operational failure and he would just pay it back?

I had this once but caught it within period to actually seek the original determination letter asking for the plan to be considered disqualfiied. With the remedial amendment period for pre-approved plans like it is I don't know if you might be able to still qualifiy for that even at this late date. Most documents have language mirroring Rev. Rul. 91-4 allowing return of contributions upon receipt of an initial adverse determination. Without such a determination the fear might be the excise tax on a DB reversion.