Single Employers with Multiple Small Plans - Audit Required??

[Guest CMDunn]

I have a company that manages multiple restaurants. Until 2012, they had one plan (#001) covering all of the restaurants and the plan was considered a small plan for the audit requirement. In 2012, they set up multiple smaller plans (#002 - #005) based on the particular location of the restaurant that the employee worked at. So, at 12-31-12, there was a significant amount of "transfers out" to these new plans.

The new plans all have the same EIN (just successively numbered plans, 001..002...003, etc.). Each of the plans have an identical plan document and operate under the same plan provisions.

This isn't a controlled group issue because the plans all have the same EIN (one employer). I can't locate anything in the regulations that address the audit requirement in this particular situation. It seems that they broke the large plan into smaller plans to keep from having the audit each year. But substance over form says that these plans are essentially one plan...

Has anyone ever come across this issue? If you can help shed some light on this, I would appreciate it.

Thank you.

[Guest CMDunn]

I'm sorry, I should add this....

The plan became a large plan during 2012 which caused them to need an audit. This is when they decided to break the plan into smaller plans...

[ETA Consulting LLC]

They should've done this in 2011 (before it became a large plan) and avoided the audit altogether. No big deal because you, now, have 5 small plans.

Good Luck!

[Peter Gulia]

While my suggestions likely would be different, read Question 14 [pages 17-18] in the 2009 American Bar Association Joint Committee on Employee Benefits Q&As session with EBSA staff.

http://www.americanbar.org/content/dam/aba/migrated/2011_build/employee_benefits/dol_2009.authcheckdam.pdf