Multiple Employer 401(k)

[52626]

We have a client, that we discovered had a second company participating in the 401(k) Plan. They are not a controlled group, but a multiple employer. This was NEVER addressed by the TPA in any correspondence to the client.

When we contacted the TPA doing the work on the plan, they claimed all that they needed to do was a participation agreement so the document matched what they were doing in operation.

Another TPA stated the plan needed to file under VCP since there was an entity participating in the plan that was not allowed to and therefore an document defect.

Anyone have thoughts on this.

Thanks

[QDROphile]

1. Everybody is overlooking the securities law aspect of the circumstances. They should be considered if the arrangement is going forward.

2. What new terms does the plan document need to allow the arragement? If new terms are necesary, is it going to be necesary to have a retroactive effective date? The IRS position is that retroactive amendments, with very limited exceptions, must be effected through VCP. Based on a VCP filing for an employer that had members of the controlled group fail to execute participation agreements, the IRS believes that particpation agreements are plan documents with plan terms, and retroactive adoption is a retroactive plan amendment.

3. Forms 5500 have not be done correctly.