Penalties for not making a top heavy minimum contribution?

[K2retire]

A client for whom we are the advisor, but not the TPA, claims they were not told that they would be top heavy for 2016. They now say there is no way that they can afford to make the top heavy minimum contribution. We have explained repeatedly that they don't have a choice. In response we are being asked to describe the consequences of not making it. They are apparently willing to accept the risk of being caught because they believe it is unlikely. Beyond disqualification, what are the consequences?

 

[ETA Consulting LLC]

It is what it is.  There are books that could be written on everything that could've been done (by the TPA) to ensure this type of situation gets avoided. Ideally, you know a plan's TH status on the 1st day of that year; ample time to explain to the owner (and any other key) to not contribute a single dime to the plan.  Hell, even amend the plan to disallow their continued participation if you have to.  But, when it gets to this point, there isn't much of a story on what to do, but how to change your service delivery to ensure it doesn't happen to another client in the future.

Good Luck!

[TPAJake]

Long term maximum security incarceration.  TPA included

[RatherBeGolfing]

25 minutes ago, TPAJake said:

Long term maximum security incarceration.  TPA included

HA! Not for this TPA!