plan admin qt.

[Guest mab]

Here's my issue:

I have a client who has an opportunity to market her plan document through a third party and do any plan admin work associated with this marketing. That third party is promoting this plan as a customer service gesture to its clients. Say 100 small clients want to adopt this plan, my thoughts (aside from potential controlled group & affiliated service group issues) are as follows:

I want each employer to adopt its own document for fear of a multiple-employer arrangement and the disqualification ramifications attributable to reg. section 1.413-2(a)(3)(iv).

My concern is on the trust side. In order to gain economies of scale (and to maintain good relations with the mutual funds), can the client establish a single account with one or more mutual funds and then break the account(s) out into "sub-accounts" down the each employer and their respective employees without group trust or master trust issues? The software system is capable of doing this. Or am I forced to open up 100 separate accounts much to the chagrin of the plan client and the mutual funds?

Spitting out separate 5500s is not a concern.

Any comments would be appreciated. Tx.

[alanm]

I think you are stuck with opening up different accounts at the fund companies per adopting employer. Only the multiple employer plan allows a co-mingled trust for unrelated employers.

How the accounts are titled at the fund companies is the important issue not whether on not your software can do the sub-accounting.

[Guest mab]

Why can't you create a group trust? Every discussion I have read discussing group trusts is that each employer may maintain their individual plan and individual trust but authorize their individual trust to participate in a group trust. I also did not see any requirement that the plans all be from a related employer or controlled group of corps.

I also did not see anything that requires a bank to hold the assets of a group trust. I realize the same is not true with respect to common trusts and master trusts.

Does anyone have any insight? Tx.

[IRC401]

If you want to market a group trust that holds mutual funds, you better check with an attorney who specializes in securities law whether there are any SEC or Blue Sky issues.