Correction re multiple employer plan status

Client operated DC plan since 1983 as single employer plan with multiple adopting employers within the controlled group.  Discovered in 2016 that adopting employers were not, in fact, in a controlled group, resulting in the plan really being a multiple employer plan.  Client restated plan in 2016 (VS document) indicating that it was a multiple employer plan.  Throughout the life of the plan, all adopting employers signed participation agreements.  Question - is this a failure that we need to correct through VCP?  Is this a document failure going back to the original effective date?  What parts of the plan should be amended to reflect "multiple employer" status.  Any thoughts?

I think documents in general allow for participating employers, whether affiliated or not, so it doesn't look like a document issue/failure to me unless the language was very particular to employers within a control group. If that is truly the case, then VCP might be the answer.

The big issue to me is that as a multiple employer plan that each employer is deemed a single separate employer for purposes of coverage, nondiscrimination and tax deduction limits. So if you were running ADP/ACP and/or general testing on a total plan basis, then those tests are wrong. If properly re-run tests subsequently fail then you are definitely looking at VCP.

1983, really? Wow, hopefully the ownership changed over time (recently) so they were a CG or an ASG for much of that time.

Good luck and Happy Thanksgiving!

We are looking at the testing issue now.  Just trying to nail down all the possible failures and how to correct them.  If we have to go to VCP for the testing failures I would think the IRS may notice the issue with the plan document; if we can address that head on it would be better.