Multiple Employer plans

[abanky]

Just trying to get a handle on this...

Some basic questions.

Do the assets need to be pooled? How are assets divided up for funding purposes? (are the pooled, but tracked separately?)

If an employee leaves one employer and goes to another, how is the shortfall liability made up?

Thanks,

[Andy the Actuary]

Assets are technically pooled whether physically housed in separate buckets that are all part of the same trust. I.e., the gross investment income would be allocated among the buckets. Whether or not a book separation of assets is maintained depends upon whether or not the multiple employer plan was in effect prior to January 1, 1989.

My recollection is that employee transfer among employers sponsoring the plan does not trigger a separation of employment for benefit purposes. If separate allocation of assets is maintained, guess is transfer of liabilities and assets would occur in the accounting. Suspect this may have been covered in a gray book question.

[abanky]

Each plan requires a separate valuation and schedule B correct?

[david rigby]

Just in case this helps:

Gray Book 2010

QUESTION 1

PPA: Funding: Ordering Rules for Contributions In Multiple Employer Plan

Plan X, a multiple employer plan to which § 413©(4)(A) applies (thereby requiring the rules of § 430 to be applied separately for each employer under the plan as if each employer maintained a separate plan) has three participating employers A, B and C.. During 2009, B stops contributing to the plan, while A and C make contributions to meet their obligations. As a result, the 2009 Schedule SB will show an unpaid minimum on line 39 attributable entirely to B.

a) For 2010, will the ordering rules force any contributions from A or C to go towards meeting the unpaid prior year minimum attributable to B?

b) For 2011 and later plan years, will the assets be reallocated so as to bring the assets of the B portion up to the level comparable to that required for a spinoff under §414(l)?

RESPONSE

a) The rules relating to the ordering rules apply separately to each participating employer so that the UMRC attributable to B will have no effect on the manner in which the contributions from A or C are applied.

b) Yes. Under §413©(7), plan assets are reallocated each valuation date in accordance with §414(l) to apply the funding requirement of §413©(4)(A). Prior year receivable contributions are included as plan assets for purposes of this calculation only if they are properly included in assets under §1.430(g)-1(d)(1)(i).

The above Response is a summary, prepared by representatives of the Program Committee, of the oral responses to the question posed to certain staff members of the Treasury and IRS, which represent only personal views of the individuals who provided them. Accordingly, the Response does not necessarily represent the positions of the Treasury or the IRS and cannot be relied upon by any taxpayer for any purpose.

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