Shoe company based in the UK and has US employees. The US operations have an EIN and US address based in Portland. The owners reside in the UK and are not US citizens. All US based employees are US citizens and earn W2 compensation. They are wanting to set up a 401(k) plan with ADP and the ADP sales rep is telling them that they can indeed do this. Our hesitation is that there would be no US citizen who would serve as the plan’s trustee.
I'm reading a previous post from 2020 that speaks to this. In reading the treasury reg, specifically 301.7701-7(d)(1)(v) Example 5, it seems that it is permissible to use a directed trustee, as provided by ADP but I am not sure if I am missing something. Our other hesitation is due to receiving conflicting, and gray area guidance from other practitioners.
I’m sorry but I am thoroughly confused at this point. If the plan uses a directed trustee, does that satisfy, both the “control” and “court” tests and can they set up a plan?
Sorry for my ignorance, we just want to do what is right.