ASG or what?

[SMB]

If there's a prior post addressing this fact pattern/issue, please refer me to same. Otherwise...

Have seven (7) financial consultants ("FCs") who currently operate as sole proprietors. These seven FCs are going to form an LLC ("FC-LLC"), of which each FC will be an equal member. FC-LLC will be taxed as a partnership, but will generate no income, per se. The FC-LLC will lease office space, furniture, etc. to the FCs and hire clerical staff, who will be employees of FC-LLC. None of the FCs will receive any compensation from FC-LLC. Each will continue to have his own Schedule C earned income from fees and commissions received on the sale of securities and insurance, as well as providing investment advisory services. Each FC has his own clients, although some client may be "shared". Each FC currently sponsors his own retirement program - in the form of either a qualified plan or an SEP.

The FC-LLC is going to establish a 401(k) Profit Sharing Plan for the employees of FC-LLC, which will have benefits, rights and features as good as, or better than, any of the individual FC's plans/SEPs.

Query 1: Is this an Affiliated Service Group - or something else?

Query 2: Depending on the answer to Query 1, do all eight (8) entities need to be aggregated as a single "Employer" for coverage and testing purposes? (Most of the FCs are "older", so cross-testing will work well for 401(a)(4) purposes.)

Query 3: Am I anywhere near the mark regarding this situation?

Any - and all - comments most welcome. Thanks!

[david rigby]

You might find value here: http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer

Note especially the link "view Q&As by topic".