Multiple Employer Plan or Affiliated Service Group.

[Guest Thornton]

We just assumed administration responsibility for what we thought was a multiple employer plan sponsored by Company A, a nursing home business. Company A owns and manages a number of nursing homes, including Company B, owned by unrelated person. We originally assumed that Company B would be a partiicipating employer in Company A's plan, creating a multiple employer plan.

We have since learned that Company B pays Company A an annual management fee to manage the facility and to pay the employees, who remain employees of Company B. However, the manager of Company B is an employee of Company A, and makes all the hiring and firing decisions, sets salaries, and has total control over the activities of B's employees.

1) Do we have a management affiliated service group, requiring the employees of B to be included in A's coverage test, or a multiple employer plan requiring B to tested separately from A?

2) If #1 is yes, do we have to worry about the other companies owned by the owner of B as we would if we tested B separately as part of a multiple employer plan?

Thanks.

[Guest Thornton]

One more thing: Company A manages nursing homes for no other company.