New ASG Member

[Gilmore]

Two doctors are partners in a medical practice with a 401(k) plan.  The partners are the Drs' personal corporations.  A third doctor with two employees joins the practice as a partner.  The third doctor's personal corp is now the third partner in the ASG.  The two employees have several years of service with the third doctor.  The two employees are now employees of the medical practice owned by the 3 doctors.  

Is the service earned under the new doctor's personal corp automatically considered service under the medical practice 401(k) plan due to now being a related employer in the ASG?  Or does the plan need to amend to permit the prior service?

I'm hoping I explained that correctly, and thanks very much for any assistance.

[Lou S.]

Well you have to grant service for time with all ASG/CG members, but I don't believe that extends to the time before they were an ASG/CG.

To be clear and avoid any potential confusion, the plan should be amended to grant past service with new doctor's corp if that's the intention which it usually is in these situations.

[Gilmore]

Thank you Lou.  The prior service was my concern.  Makes sense to make it clear in the document that the service is credited.  Thank you.

[Mr Bagwell]

Timely question as I had been mulling through a scenario that I have been working on....

Does the new third partner personal corp adopt the existing plan?

[Gilmore]

That's what we are doing with our situation.  

[FORMER ESQ.]

On 12/4/2020 at 5:30 PM, Gilmore said:

Thank you Lou.  The prior service was my concern.  Makes sense to make it clear in the document that the service is credited.  Thank you.

Not required for pre-ASG service, but it is the right/fair thing to do.