Mulitple Employer Plans

[justatester]

We have a multiple employer plan, (8 separate employers) there is common ownership among them but not enough to be considered a controlled group. In 2007, we had one employer leave the plan and one employer join the plan. The question is for these employer, each wants to be tested under the plan for portion of the year that they were participating in the plan we recordkeep. Would the ADP/ACP test be considered a short plan year thus requiring the compensation be pro rated? What about the 415 limit? The employer that left joined another qualified plan and was tested for the time they were in that plan. The employer that joined was test during the time the participated in the other plan. I am not sure what the other recordkeepers did.

Any help/direction would be greatly appreciated!

[J Simmons]

Take a look at Treas Reg § 401(k)-2(a)3(ii)(A). I think you test the employer's employees, both the time in the MEP and the time part of another plan, together for the year, 2007.

[QDROphile]

I know everyone retches when I make this comment, but your reference to ADP testing indicates that the plan is a 401(k) plan. The employers need advice about compliance with securities law. It is not an adequate answer to say the the plan has no employer securities. Multiple employer plans have unique problems.

[J Simmons]

Actually, QDROphile, it's reassuring. That you will give the securities response whenever a MEP and 401k intersect is one of the more predictable things in the ERISA world. If you did not, we'd wonder if you were okay.

For what it's worth, after my own analysis (pretty extensive) of both SEC Release Nos. 33-6188 and 33-6281, I have reached a different conclusion than that which I understand Kirk Maldonado reached. I agree that it is not enough that the MEP has no Employer Securities. I also agree that the SEC and securities practitioners speak their own lingo and have their unique approach (at least that's been my experience in getting a couple of filings through the SEC). But I do not think that SEC Release Nos. 33-6188 and 33-6281 require all MEP 401k's to have SEC filings--and I don't know of the SEC having asserted such, through enforcement or comments.

[QDROphile]

As far as I know, it is all on paper, and not the subject of any focus or any real concern or actions by the regulators. Also, the ERISA stnadard relating to the relationship of the employers and what constitutes a single employer may not be the standard under the securities laws. But if a participant actually has and exercises rescission rights, I cannot comprehend all of the implications under ERISA and the tax code.