Multiple Employer Plan ? ?

[Guest naveen]

Please let me know if any more information is required or I may not have laid out the facts in their entirety.

Corporation - A (not a professional corp.) is 100% owned by individual Mr. X.

Mr. & Mrs. X are the only employees of the corporation.

Corp. A performs services for an unrelated company B (Union).

Apart from the service fees that corp. A receives from B, B also provides W-2 to Mr. & Mrs. X.

Company B has such a relationship with many other companies none of whom are related with any other company.

Company B provides two plans, a Defined benefit plan and a profit sharing plan.

No employees of any corporation are excluded from any plan

None of the employees are required to make any contributions.

Now, ER of corp. A wishes to sponsor his own 401(k) PS plan.

What if any could be the hurdles in having such an arrangement?

[Lou S.]

Unless A & B constitute an Affiliated Service Group (ASG) relationship, A would have no problem establishing its own plan.

From the limited info my guess would be A & B are not an ASG but you probably have much more info to make that determination than I.

[J Simmons]

Is there reality to Mr and Mrs X being EEs of Corp A rather than just of Union B? Or is Corp A and its contract with Union B a mere artifice to avoid Mr and Mrs X being just EEs of Union B? If the reality is that Mr and Mrs X are just Union B employees, they cannot have a separate 401k profit sharing plan. You'd need to be comfortable that analyzing EE v Independent Contractor (per IRS and court case factors) points to Corp A/Mr and Mrs X really being an independent contract situation with Union B before you ought to try this.