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Compliance Testing for An Employee Owned Cooperative


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One of our clients is running into an issue with the testing due to being an employee owned cooperative (we don't administer this plan, just their retirement plans).  There are 17 employees and all are considered more than 5% owners due to the structure of the business.

The people doing the testing are saying they fail “25% Key Employee Test, 55% Average Benefit Test and 25% Owners Test, since by definition everyone is considered an owner and Key Employee.

Do these tests apply to a Plan under this type of structure?  They are asking me for guidance, but this isn't my forte.

Thanks!

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Even if one assumes a member of a cooperative might be a highly-compensated individual, an employer might ask its service provider what comparisons the software applies when all employees are highly-compensated and none is other than highly-compensated.

This is not advice to anyone.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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