"Seven Brides for Seven Brothers"

[Lori Friedman]

An organization has 3 employees. Each employee is covered by a one-participant 401(k) plan. The plans are otherwise identical in every respect. (No, I have no idea who recommended this arrangement, or why it was done.)

Do I need to do anything special on each plan's Schedule T? Should I check the box at Schedule T, Line 4b and complete Line 4c with the information for all 3 employees?

This sort of arrangement would have to aggregated, right? Otherwise, an employer could sponsor 500 one-participant plans to avoid reporting as a large plan and paying for an audit.

[Appleby]

Lori,

By one-participant 401(k) plan I assume you mean the Individual (k)/Uni-K/Solo 401(k) plan?

If so, and these individuals are not owners of the business, wouldn’t the narrowly defined parameters under which these plans are governed automatically exclude the organization from being eligible to adopt the plan?

[Guest ActuaryWannabe]

FYI, usually when I have seen this done, it is to avoid distributing an SAR reflecting all the assets, to all participants. In a small plan it is not that difficult to back into someone else's account balance.