Is a "Participating Employer" the same as a Multiple Employer?

[Guest sugar daddy]

A 80 employee bank has an esop and it allows a one employee Title LLC to participate in the plan.

The title company adopts the plan, but their is no affiliated service or controlled group arrangement according to the bank president.

[J Simmons]

A 80 employee bank has an esop and it allows a one employee Title LLC to participate in the plan.

The title company adopts the plan, but their is no affiliated service or controlled group arrangement according to the bank president.

If the bank and Title LLC truly are not a controlled group, then you'd have a multiple employer plan (not to be confused with a multi-employer plan).

In a multiple employer plan, an employer other than the plan sponsoring employer (the one with authority to amend and terminate the plan, appoint the administrator and trustees) are usually referred to as a 'participating employer.'

[QDROphile]

An unaffiliated employer cannot participate in an ESOP. An LLC employee cannot participate in an ESOP unless the LLC is a disregared entity and a corporation is the sole member. Two strikes. In this game, one strike and you are out.

[Guest sugar daddy]

The bank ceo states there is no controlled group or affiliated status between the bank and the LLC. The bank organized the subsidiary title company in summer 2007. It began operation that November with one part time employee. The LLC reimburses the bank for overseeing its activities. The bank is the sole member of the LLC and 100% owner. The one employee of the LLC participates in the bank ESOP and the bank submitted its application for determination NOT as a multiple employer.

[QDROphile]

So how is it that the bank is the sole member of the LLC and there is no affiliation or control?

[Guest sugar daddy]

So how is it that the bank is the sole member of the LLC and there is no affiliation or control?

yeah, that's kind of why I am here. Sounds odd to me.

Irregardless, the one employee LLC should not have been allowed to be in the plan. How would you go about fixing this? VCP?

[QDROphile]

It looks to me like the LLC is a disregarded entity, which would mean that for purposes of the ESOP the employee is an employee of the bank. No problem with participation.

[Guest sugar daddy]

It looks to me like the LLC is a disregarded entity, which would mean that for purposes of the ESOP the employee is an employee of the bank. No problem with participation.

Yeah, thats how I am leaning QDROphile. I believe there are PLR's that address that if the LLC is not taxed as a corporation then the LLC can participate. The bank pays the LLC employee and the LLC reimburses the bank as well as rents space from the bank.