Control Group

[Guest elang]

We have a client with approx 75 Participants. The owners have acquired another company and they want to write a new plan for that company (approx 75 participants in the new company). Do we need to aggregate the 2 plans in determining whether or not they require a Plan Audit?

Thanks

[ETA Consulting LLC]

No. The number of "participants in a single plan" is what determines the need for an audit. That is a strategy for some companies having more than 100 employees; create separate plans to prevent each plan from meeting the definition of a "large plan".

Good Luck!

[david rigby]

Similar discussion

http://benefitslink.com/boards/index.php?showtopic=50202

[Guest elang]

So I have another situation that is nearly identical to the one I described a few months ago, but wanted to get some input before passing on the information to our client.

We have a client with 2 completely seperate companies, locations, etc... but same owner. Both companies have adopted 1 plan and it has been administered this way for 20+ years. Company 1 has 70 participants. Conpany 2 has 60. Plan has been audited for the past 10+ years. Client wants to split the plan, one for each co.; and in doing so wants to know if he can avoid an audit going forward (2013 & beyond...).

It seems from the previous response that the answer is Yes this can be done, but that this may be a gray area. Is there any risk in the client doing this?

Thanks

[ETA Consulting LLC]

No issue; this is actually a common practice. Especially when the additional costs for administering another plan is compared to the savings from not having to perform the "large plan" audit each year. Just ensure the appropriate non-discrimination tests are passes with respect to the separate plans.

Good Luck!