affiliated service group and 401(a)(26)

[emmetttrudy]

Doctor A is currently a sole prop with a 401k Plan and DB Plan. he is considering creating an LLC, the members of which would all be doctors (and HCEs), for the purpose of contracting with medical payors—hospitals, insurance companies, etc. in an effort for collective contracting and bargaining.

The Plan is to have the LLC enter into a participation agreement with Doctor A's current Plans so the compensation he receives for services rendered through the LLC would be eligible for retirement plan purposes. His two Plans would also exclude all of the other members of the LLC (since they are all HCEs, this shouldnt present a problem).

However, my question is does this create an issue for 401(a)(26)? Doctor A and several other doctors from the LLC will have met the eligibility criteria and be eligible for the DB Plan. But all except Doctor A would be excluded.

[JAY21]

I'm no help on this one, but I must say I'm seeing more and more of this fact pattern you mention and have the same question. Is an entity set-up primarily for scheduling and negogiating contracts an Affiliated Service Group trap for the unwary ? It very well may be. Maybe we all contribute a few dollars to a collective fund and see if we can have Derrin Watson opine on this. He probably already has somewhere, though I don't see it in his "Whose the Employer" book version I have, but it's likely out there somewhere (for a price).