Plan design for hotel chain. Control group issues.

[Guest tlrhodes]

Would like some ideas and input. Recently did a plan with 8 companies had to use 2 plans because of partnership issues. No partnerships in current situation and would like to use one plan. Any comments pros and cons welcome. Am meeting with a commitee therefore all viewpoints would be appreciated concerning different matches and classifications of employees, etc.

[Guest ljelaw]

I am in the process of completing a similar project. There are about 6 hotels, all unaffiliated, due to nonoverlapping ownership of the hotel investment partnerships. The plan will cover all hotels, with uniform eligibity, 401(k) provisions, distribution rules, etc., but the plan will be tested separately as needed for discrimination testing, etc. We are totally comfortable with this, and expect to realize operating and cost efficiencies based on the use of a single document. Feel free to email for more info, questions.

[Guest ljelaw]

I should have added that each hotel can have its own matching and profit sharing levels and designs, or anything else, subject of course to nondiscrimination testing (applied separately with respect to each employer). However, we are looking for as much uniformity as possible to acheive simplicity and efficiency.

[Dave Baker]

The IRS audited a hotel management client of mine, and the agent wanted to disqualify the management company's plan (which did not cover rank and file employees of the hotels managed). The management company did not get more than half of its revenues from a particular entity or group of related entities, so there wasn't a management group under 414(m). But the auditor thought somehow the arrangement must be illegal on account of the management company being owned by people who where owners in the corporate general partners of the hotels. It took over a year of letters and meetings to straighten it out, until the Atlanta appeals office agreed with me that no 414 problems existed.

[Guest Linda Wilkins]

Interesting thread. The first couple of writers deal with plans for employees of the hotel owners(partnerships, unrelated), resulting in multiple employer (k) plans; the last one deals with a management company employer (which is more typical in my experience). In the latter, aggregated testing would be required presumably unless you qualify as a QSLOB. Changes in the management contract can lead to "same desk" rule problems if the prior management firm wants to cash out its former employees who go to work for the new management firm. Any thoughts on that one?

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