Affiliated Service Group

[Susan S.]

Companies A, B, C and D are in the investment advisory/insurance business and are all LLC's. Company A has ownership in Company B, but C and D are unrelated. The four companies together formed company XYZ. A,B,C and D will continue to operate under their individual business names, but technically will no longer have employees as all will be paid by XYZ. Basically a D/B/A type situation. Due to the nature of their businesses, my conclusion is that they have formed an affiliated service group. Company A has an existing 401(k) plan and wants to change the plan sponsor to XYZ and cover all 4 entities. Do A,B,C and D need to adopt the plan as participating employers? They will still have separate EIN's but won't have any employees.

[SoCalActuary]

If B, C, or D pay their employees or owners compensation, that pay does not count for the XYZ plan unless they are also adopting employers to the plan. So, basically, yes, they probably need to adopt.