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Which entities does B consider itself to be an Affiliated Service Group with? What did B tell A their options are? So far, you've mentioned insurance and payroll for A's regular employees being done by B. To me, that screams PEO relationship and you haven't said anything that changes that impression. Are the regular employees still common law employees of A? Who hires and fires them, tells them what to do and when, etc. It wouldn't surprise me to find that a PEO is still running a plan as a single employer plan in spite of Rev. Procs 2002-21 and 2003-86. We came across one in 2009 or 2010 that was still operating as a single employer plan. They pitched to one of our self-employed clients (with no employees) and promised he could do employer contributions as high as 35% of compensation in their plan.

Some practitioners wonder that EBSA's more recent interpretations have given charitable-organization employers too much false hope about somehow making available 403(b) contracts without doing anything to establish or maintain a plan. If an employer has discretion in administering a retirement plan (which seems inevitable if a participant must not decide her own claims, and an insurer or custodian is unwilling to decide claims), shouldn't a participant get the disclosure and reporting that Congress in 1974 provided for? And if a small business with three employees can file a Form 5500 report on a salary-reduction-only 401(k) plan, why is it too hard for a small charity with three employees to file a Form 5500 report on a salary-reduction-only 403(b) plan?