Multiple Employer Plan

[Guest texasactuary]

We have 2 entities, one for-profit one not-for-profit. The for profit has a 401(k) with deferrals only. The NFP has a safe harbor 401(k).

To reduce costs they would like to put everything together. We like the idea of a multiple employer plan but how to we reflect the different benefits in the document (Corbel Volume Submittor). Can we simply write in the eligibility that Employees of the for-profit entity are not eligible for the safe harbor provision?

I know that the testing (where applicable) is separate and i know all the 5500 nuances, etc.

[alanm]

I don't think you can co-mingle the two trusts. A 403b trust must be kept separate from a defined contribution plan trust. A multiple employer plan under section 413c, allows for comingling for employers with a common business relationship and only for similar plans: a defined benefit cannot be combined with defined contribution. The PEO industry commonly uses the multiple employer plan arrangement for their clients.

[Guest texasactuary]

To clarify, both entites have 401(k) plans. No 403(b)s in the mix.

[Kirk Maldonado]

Last time I checked, you can't use a prototype for a multiple employer plan.

[alanm]

Kirk is correct, there is no such thing as a prototype multiple employer plan. And, if you draft a MEP and apply for a D letter, you won't get approval if you combine 403b with the 401k.

[alanm]

However, a non profit can adopt the 401k, which is the case you stated. therefore, you can have a MEP plan drafted and all the companies, including the nonprofit can adopt on. Although there still must be a business link between the companies: see section 413c for a description, also Sal Tripodi's book has a section on this.

[mbozek]

IF the NP is a 501©(3) entity replace the 401K plan with a 403b plan with the same contribution mix. There is no ADP testing in a 403(b), no IRS approval and 5500 reporting excludes info on plan assets. Then you only have 1 qual plan to administer.

[Guest texasactuary]

I was not thinking prototye (I agree that it won't allow ME).

They are set on 401k for both entities.

The business link is that the owner of the for-profit is the guy who "endows" the NFP and who controls the Board of same.

I think that I can handle the overall document issue of getting them in the document as a ME. It looks like i can use one trust.

I think that i will have to be very clever and careful in the document language to distinguish what the NFP participants are eligbile for versus the FP participants. That is the crux of the issue.