Affiliated Service Group in 401k

[CLE401kGuy]

Dr. Group A has 30 docs - they have 8 billing personnel and 9 nurses... Dr. Group A wants to split off it's billing personnel with a 100% owner who is not a doctor and has no ownership in the Dr. Group itself... if all services provided by the new billing company is for Dr. Group A - does an affiliated service group relationship exist? if yes, the billing group would still need to be considered in the retirement program in place, if not, the billing group could start its own plan entirely independent of that of Dr. Group A.

If the answer is yes and the billing group is an affiliated service relationship - how much revenue from different non-Dr. Group A sources must be generated by the new billing company for it to NOT be an affiliated service relationship? 50%?

[ETA Consulting LLC]

Dr. Group A has 30 docs - they have 8 billing personnel and 9 nurses... Dr. Group A wants to split off it's billing personnel with a 100% owner who is not a doctor and has no ownership in the Dr. Group itself... if all services provided by the new billing company is for Dr. Group A - does an affiliated service group relationship exist?

Probably not. There would have to be "at least" some shared ownership.

You'd want to ensure the "billing service" company doesn't not provide management services under 414(m) and does not fall under some type of "shared employee" arragement. What this is basically saying is that anyone can actually start a 'billing service' company and pick up the Doctor Group as their first client. You just have to ensure that there is a bona-fide employer-employee relationship between the billing service company and those employees (and they are not merely a smoke screen to hide the fact they are employees of the Doctor Group).

Good Luck!

[Mike Preston]

Dr. Group A has 30 docs - they have 8 billing personnel and 9 nurses... Dr. Group A wants to split off it's billing personnel with a 100% owner who is not a doctor and has no ownership in the Dr. Group itself... if all services provided by the new billing company is for Dr. Group A - does an affiliated service group relationship exist?

Probably not. There would have to be "at least" some shared ownership.

You'd want to ensure the "billing service" company doesn't not provide management services under 414(m) and does not fall under some type of "shared employee" arragement. What this is basically saying is that anyone can actually start a 'billing service' company and pick up the Doctor Group as their first client. You just have to ensure that there is a bona-fide employer-employee relationship between the billing service company and those employees (and they are not merely a smoke screen to hide the fact they are employees of the Doctor Group).

Good Luck!

Perfect answer.

[CLE401kGuy]

Here is a nuance to the above.... regarding the ownership of the billing entity - a non-owner of Dr. Group A will be the 98% owner of the Billing Co. - two of the docs from the doctor group will own 1% each - the 98% owner though does not have an option to sell without the approval of the docs in Dr. Group A - i.e. they have first right of refusal - in that scenario - do I then have an affiliated service group?

[ETA Consulting LLC]

the 98% owner though does not have an option to sell without the approval of the docs in Dr. Group A - i.e. they have first right of refusal - in that scenario - do I then have an affiliated service group?

You may actually have a controlled group since the docs in Dr. Group A are considered as owning that 98%.

Gotta love it when fact patterns change

Good Luck!

[Mike Preston]

"Gotta love it when fact patterns change."

I think all credentialing organizations should add a course to the current lineup called:

"Whack-a-Mole - how to recognize when you are playing it with your client and how to handle it."