Not-for-profit controlled group?

[Guest jim williams]

Is it possible to have a controlled group or affiliated service group involving not-for-profit organizations? Specifically, we have a client who is a labor union that established a 401k plan solely for its nonunion employees. One of the employees is paid by a separate entity named The Welfare Fund. Can we add the Welfare Fund to our prototype document as a participating employer?

[Ron Snyder]

Not for profits are not inherently tax-exempt or charitable entities. They are simply entities created in a form that typically has a Board of Trustees or a Board of Governors rather than a Board of Directors, an executive director rather than a president or CEO and members rather than shareholders.

The controlled group and affiliated service group rules are relatively clear, and do not apply only to for-profit entities. You must go through the analysis of the facts and circumstances tests. If the entities are not corporations, the test is not percentage of ownership but profits interests, participation interests, membership interests or control, as applicable.

[GBurns]

Does the Welfare Fund have its own FEIN etc? Does it have separate Trustess and mamangement etc?

If it does not, then it would not be a separate entity.

If it is a separate entity then you could consider CG, ASG or co-sponsor issues.