What's the business code (Form 5500, Line 2d)?

[Lori Friedman]

Please help me settle an ongoing disagreement that I have with some of my partners. This isn't a critical issue, but it would be nice to have some other opinions.

The Form 5500 instructions say to use a business code that best describes the plan sponsor . This is a certainly a simple decision for any organization that sponsors a single-employer plan for its own employees. Also, the guidelines are clear for a multiple-employer plan: choose a code that best describes the main activity of the participating employers.

A multiemployer plan, however, is sponsored by a joint board of trustees. Neither the labor organization nor the contracting employers sponsors the plan. I believe that the appropriate business code is 525100 (Employee benefit funds).

Example. There's a collectively-bargained plan for electricians. The multiemployer plan should use code 525100. The employers, who contribute to the fund pursuant to collective-bargaining agreements, use code 238210 (Electrical contractors) for plans that they sponsor for their non-union employees. When the union sponsors a plan for its own staff members, the code is 813930 (Labor unions and similar labor organizations).

Obviously, the fate of the free world isn't hinging on the answer to this question. I'm just curious about other people's thoughts.

[SoCalActuary]

I would go with the code applicable to the workers covered under the plan.

If the covered employees work for the benefit plan, then you choice would be logical.

Otherwise, the plan covering electrical workers should be for the industry they work in.

Just my opinion.

[Guest Brian4]

For what it is worth, I agree with SoCalActuary. The instructions say: "If more than one employer or employee organization is involved, enter the business code for the main business activity of the employers and/or employee organizations."

Making contributions to the plan and appointing trustees could be considered involvement, so for the example, one could give the business code for electric contractors.

[GBurns]

What am I missing?

I thought that a multiple employer plan is a plan maintained by 2 or more employers. I thought that that definition was as per IRC 413© which governs and Treas Regs 1.414 which defines etc.

The post stated that this plan "is sponsored by a joint board of trustees". It even goes further to point out that "Neither the labor organization nor the contracting employers sponsors the plan."

Is this allowed?

[Guest 5500]

Yes, it is allowed.

In a multiemployer plan, the sponsor is the joint board of trustees. See the 5500 instructions for the definition of "plan sponsor". The trustees are the representatives of the employers and employee organizations that established the plan.

In response to Lori's question, we use the code for the trade, in your example the electrical trade. You are correct that the instructions say to use the code for the plan sponsor's business, which in this case would be the board of trustees, but they go on to say you use the code for the main business of the employers and/or the employee organizations if more than one employer or employee organization is involved. I read this to include multiemployer plans, not just multiple-employer plans.