Controlled Group/Participating Employers

[Deaconmomma]

I have a client who is a technical school with different campuses all in one plan. Each campus processes it own payroll and has its own EIN #. They file a consolidated Tax Return with all EIN #'s listed.

Should they have each signed a participating employer adoption page when the PPA document was executed?

Since they didn't, what options do we have for correcting? Will we have to file under VCP?

[Flyboyjohn]

Yes, each Participating Employer should have executed a new Participation Agreement.

Which begs the question did they all sign the prior EGTRRA document?

While no one "has" to file under VCP they certainly should, it's ridiculously cheap for a late amender only a couple of months late.

[jpod]

Check to make sure that the participating employer adoption page is necessary where it is a restatement of an existing plan, especially if it is a restatement of the same sponsor's prototype or vs.

[Deaconmomma]

They did not sign participating employer documents on the prior document.

This is the first time they have told me that they think they are a multiple employer. I new they had two or three other campuses but all census information for testing comes from the corporate offices. I have always tested them as one group.

This is a large plan that is audited and no one has ever mentioned this.

[mphs77]

could be that it was never mentioned before is that no one thought to look......

[Doghouse]

If you are saying that all these employers are under common control, then it is possible that the plan document automatically brings them in. Many do. You should check.

[Deaconmomma]

Doghouse,

When you say common control? What exactly does that mean? Sorry to be dense.

The employees are and have always been in the plan and tested. Just trying to figure out if they all needed to complete the Participating Employer Group? I think they should be classified as a controlled group but participating employers documents have never been signed. Not saying its correct.

[Doghouse]

Your questions suggest that some basic education is needed. There are many resources available, and you should probably consult one. My feeling is that the subject is too extensive to be addressed on the message boards.

[Mike Preston]

Clients typically don't like it when they are told that there are perhaps hundreds of thousands of dollars in improper deductions that have been claimed over multiple years. The client should hire somebody who can peel back the layers on this potential clusterbomb before it gets any worse.