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Canadian Based Company


fourohone

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Hello All -

Longtime lurker, first time poster.  I really appreciate all of the insight from this forum.  My question:

Canadian based company has a few US Employees, they are Sales People located throughout the US.  They want to provide similar benefits to their US Employees like they do to their Canadian Employees.  They are inquiring about a startup 401k Plan.  Assuming they have an EIN would it be feasible to create a start-up 401k Plan for these employees?  I don't see a reason why they can't but I have zero experience with a Foreign Company setting up a new 401k Plan so I want to make sure I am not missing something.  If there is an alternative suggestion to a 401k I would be all ears as well.  Thank you very much.

 

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They can... but a few things to keep in mind:  1)  A start-up for a "few" employees is not really economical for many service providers.  They should be prepared for "above average" costs; 2) Assets need to be held within the jurisdiction of U.S. District Courts.  That generally means the situs of the trust is in the U.S. which generally means a U.S. based trustee; 3) Choice of plan sponsor might be of concern as well.  The one's I've done had a "U.S." subsidiary (a corporation based in the U.S.) which employs the U.S. based employees.  That makes it easy - make the U.S. sub the sponsor.  If not (and just having an EIN doesn't mean they do), there are some interesting legal and fiduciary issues that may be impacted by Canadian law that the company should investigate with international counsel (one versed in both Canadian law and ERISA); finally, the plan should be drafted very carefully to ensure only the intended employees are included - especially if people bounce across the border occasionally.

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