We have a prospect who wants to implement a 401(k) plan as soon as possible and we are coming into the discussion late. The investment vehicle will be a major daily valued platform and this provider cannot implement the platform before January 2021. The provider has advised the client to go ahead and start deferring and keep the deferrals in their checking account until the platform is ready to receive contributions. I assume they are playing on the reasonable segregation language but I am not terribly sure what they are thinking. I don't see how this possibly would not be a prohibited transaction, not only is it outside the Safe Harbor, any deferrals in November would be outside the standard even if reasonable segregation/admin feasibility is applied.
I can't find this situation anywhere, but surely it has occurred before. I just want to make sure I'm not missing something here.
