Affiliated Service Group (ASG) Rules

[ALBailey]

We have 3 physician practice groups and 1 management company that comprise an Affiliated Service Group (ASG) through 9/30/07. They participate in the same plan, Plan A. We break the ASG effective 10/1/07 and create new retirement plans for the 3 practices groups, Plans B, C, and D. How are the minimum coverage test (410(b)) and ADP/ACP tests for Plan A run for 2007? Who is counted and what compensation is considered?

[buckaroo]

Have you considered the transition rules regarding coverage? If Plan A is passing coverage just prior to the "spin-off" and there are no other significant changes to the plan going forward, the plan should be able to rely on the transition rule for pye 12/31/2007 as well as 12/31/2008. Remember to test each mandatorily disaggregated portion spearately. The ERISA outline book details this rule in Chapter 8.

As far as the nondiscrimination testing is concerned, this has no transition rule and I would think it is run as normal. You run the ADP for all employees who were eligible for the 401(k) portion in 2007. So all employees should be included. I would think the ACP and any test for a poss PS cont would run the same way.

For plans B,C,D, the question is are the physician groups related? If not, then they should simply be treated as unrelated individual plans and tested as such. if they are related then the testing gets more complicated.

I hope this helps.