PEO, but employers are not related

[John Feldt ERPA CPC QPA]

After looking at Derrin's recent Q&A on MEPs and PEOs, I am curious about more details of how a 5500 would be filed now, if it was not filed a bunch as single employer plans in the past.

http://benefitslink.com/modperl/qa.cgi?db=...loyer&n=321

and

http://benefitslink.com/modperl/qa.cgi?db=...loyer&n=329

Suppose an employer is part of a defined contribution MEP PEO with ten or so completely unrelated other employers. Testing was always done on an employer-by-employer basis, but now the thinking is that the Form 5500 should also have been filed on an employer-by-employer basis as well (it was not filed that way in prior years).

Suppose each of the unrelated employers wants to now comply with the requirement to file their own 5500. Going back to the beginning of the plan to file 5500s from decades ago seems to be imprudent from a cost standpoint, so they are considering that they'll start with their 2011 Form 5500 filing.

However, what do they show for the starting assets on this 2011 Form 5500, which is now the first 5500 being filed for this employer? Would you suggest the starting assets are zero and also show a transfer in from the MEP? Plus, when the MEP files its 5500, it shows a transfer out of the same amount and identifies the plan it is transferring into? Thus, transfering out from what was misunderstood to be a single MEP into a now understood single employer plan? Since the one of the participating employers also sponsors the MEP, there will still be some participants and assets left on the 5500 for what once was considered as the main PEO.

The idea here is to do what can reasonably be accomplished yet still satisfy the DOL and IRS. Any other ideas for this?