Multiple Employer Trusts (MET)

[andi2008]

I'm looking for some direction on the administration of Multiple Employer Trusts, specifically with regard to filing 5500 forms. I can't find any specific practitioner information on how they should be filed.

I know that the separate plans file their own 5500 forms, but is there a master trust filing required? If so, does it require audit if the sum of participants in all participating plans exceeds 120?

[Below Ground]

I do a number of these. You need to first answer if there is some relationship between firm. For example, you have a group of restaurants (same business type) that are NOT a controlled group or ASG. You have one filing done by the "primary sponsor" which covers the Plan as if a single plan of that firm (checked as a multiple employer plan), with a listing of adopting employers (new requirement). Just to support this response, I have been doing these types of programs for over 20 years, and have even had several 5500 IRS and DOL Audit successfully processed.

Now if you have an "Open MEP" where firms have no "relationship" like same type of business, you have separate filings for each Adopting Employee. Each program stands alone.

Hope that helps.

[Mr Bagwell]

So to make sure I have this correct, I'll use my situation.

A and B Company

Company A Owner 1, 7/8 ownership, or 87.5%, Owner 2, 1/8 ownership, or 12.5%

Company B Owner 1, 78% ownership, Owner 3, 22%

I come up with 78% identical ownership so NOT a control group.

Both Companies in the same plan as a multiple employer plan.

Company A is the Controlling Member (Plan Sponsor or Lead Employer)

Company B is the Participating Member

One 5500, marked as Multiple Employer Plan and listing both companies in the detail of 5500. Correct?

[rcline46]

I agree this is not a controlled group, depending on the relationship between 1, 2, and 3, because you fail the 80% rule. There is not enough information to determine if an Affiliated Service Group might exist.

So it appears you have Multiple Employer Plan and follow the From 5500 instructions for MEPs.

[Mr Bagwell]

No familiar relationships between 1, 2, and 3.

Not an Affiliated Service Group.

Thanks

[Mike Preston]

You also need to determine if any of the stock is excluded. It would not be uncommon to see something like a preference clause that runs in favor of Owner 1 and against (that is, non-reciprocal) Owner 3. If that is the case, then it is a controlled group.

Sometimes this information is very difficult to sus out. I had one case a while back where I was hired by corporate counsel to determine whether a controlled group existed. Even though I was hired by corporate counsel I couldn't get him to let me see a copy of the by-laws as he said he had an arrangement with his client that precluded him sharing a copy.

I had to settle for him reading the relevant parts to me over the phone. We finally came to the conclusion that Owner 1 had a right of first refusal that was not reciprocal with respect to owner 2. Yup, controlled group.

I couldn't certify the results since I wasn't in possession of the by-laws so I issued a caveated report and the lawyer ended up sending a "certifying" letter to the auditors (since they wouldn't accept mine).

Moral of the story: CYA