VCP Eligible?

[Young Curmudgeon]

I just learned that a plan I administer (sponsored by company A) has been receiving salary deferral contributions from an unrelated employer (company B) for the last two years. The two companies share a payroll under company A's name but are otherwise unrelated. I guess you could say company A is acting as a leasing agency for company B.

They are not a controlled or affiliated service group. There is no participation agreement and the Company A's plan document is not set up for multiple employers.

Does anyone think allowing an unrelated employer to participate in a plan an issue that can be resolved through VCP?

[Kevin C]

Allowing an unrelated employer to participate doesn't seem to fit the conditions needed to correct this under SCP [Rev. Proc. 2013-12, Section 4.05(2)]. VCP is available to correct all qualification failures [section 4.01(2)], with a few exceptions that would not apply here. I don't see any reason why you can't correct this under VCP.

[Young Curmudgeon]

I took the question to outside counsel and while they agreed it does not fit VCP perfectly, they recommended VCP to resolve the issue. It is being submitted in August.