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CB/DC with PEO


Cloudy

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I have no experience (yet) with PEO's. Doctor participates in a PEO 401(k)/PS plan. Doctor wants to start a CB plan only for her business. I think that is OK so far?

To pass a4 CB plan needs a PS combo. How do I handle the PEO K and PS contributions for a4 testing? The PEO PS provisions are individual classifications and no allocation conditions, so I guess they should be able to contribute what is needed for these people, if I can use it. Is it just like it was a single employer PS/k plan for a4 purposes? Or, should the doctor just start both a CB plan and a PS plan?   

 

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The Dr's participation in the PEO plan is as a participating employer in a multiple employer plan, correct? Yes, you should be able to aggregate her PS plan with CB for testing (must have same PY) and yes, allocate the necessary PS in the PEO plan to pass as if a single employer plan. I would feel more comfortable with the arrangement having the control over both plans - i.e., starting a separate single employer PS-K, but if the PEO document has the necessary flexibility (which it appears to have) and that plan has a quality service provider, then why move? 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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