Can unrelated employers adopt the same prototype plan document?

[katieinny]

I tried asking this question under Retirement Plans in General, but got no response (so far).

Two unrelated employers would like to adopt the same prototype plan, making it a multiple employer plan.

First, I'm hoping that the fact that the employers are unrelated isn't a problem; and

Second, I'm hoping that the document will retain it's prototype status and not be deemed to be individually designed. IRS Announcement 2001-77, Sections II and III seem to support that, but I would like to get some opinions from other practitioners.

[Harwood]

Our prototype allows only "Affiliated Employers" to adopt the plan as Participating Employers. "Affiliated Employers" must be part of a controlled group or under common control or affiliated service group [the section 414 groupings].

It is my understanding that all prototypes have the same requirement and that having unrelated employers adopting the plan takes it out of prototype.

Check the definitions in your plan document.

[KJohnson]

See below with regard to Corbel's answer from the Prototype Plan Q&A's on Benefits Link. That said I have seen "snap on" amendments to regional non-standardized prototypes that purportedly support a multiple employer plan. I would assume that these are then converted into individually designed, but I am not sure

--------------------------------------------------------------------------------

Non-Control Groups and Prototype Documents

(Posted January 5, 2001)

Question 13: Can a protoype plan document be used to draft a plan that covers multiple employers? The employers are not members of a controlled or affiliated service group.

Answer: Pursuant to section 8 of Revenue Procedure 2000-20, a prototype plan cannot be drafted to cover multiple employers (i.e., two employers that are not members of an affiliated service group or a control group).

--------------------------------------------------------------------------------

Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. The laws, regulations and court decisions in this area change frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the laws, regulations or court decisions that occur after the date on which that Q&A is posted.

--------------------------------------------------------------------------------

Copyright 1999-2003 SunGard Corbel