Plan number when moving from MEP

Hello.  We have a new client - Client A - that was a participating employer in a MEP who has decided to leave the MEP and establish their own plan.  We have assigned Plan 001 to the client's new plan as it is the first plan being sponsored by client A.  A colleague is questioning why we are using 001 and not 002 for the plan.  Is our reasoning correct on the plan number?

On 10/18/2018 at 1:16 PM, cpc0506 said:

Hello.  We have a new client - Client A - that was a participating employer in a MEP who has decided to leave the MEP and establish their own plan.  We have assigned Plan 001 to the client's new plan as it is the first plan being sponsored by client A.  A colleague is questioning why we are using 001 and not 002 for the plan.  Is our reasoning correct on the plan number?

 

 

I'm sure you know every plan in a MEP has to file its own 5500, so have you seen the 5500's filed by your client in the past?  Since those are "plans" and probably do use 001, then using 001 when they move out of the MEP is appropriate if it is the same plan as it was before.  You use the words "new plan", but I'm going to bet you are using those words incorrectly and it is NOT a new plan but a restatement of the existing plan as a non-MEP and therefore, you were correct to use 001. Now, the question becomes did you properly complete the new plan document (not "new plan" ) to show it was a restatement and not a new plan?

The non-MEP is NOT the first plan to be sponsored by the client since the MEP is a plan sponsored by the client.  So it sounds like you got the right answer but for the wrong reasons.  Do I have that right?

I misspoke,  I have now found out that Client A was a member of Control Group A and was a participating employer in Control Group A's plan.  Client A was sold and is now part of Control Group B.  Control Group B does sponsor its own plan, but Client A wants to sponsor their own plan (with same provisions as Control Group B's plan.  Does this change your answer?   Would this  be a new plan with Client A as the plan sponsor?

20 hours ago, cpc0506 said:

I misspoke,  I have now found out that Client A was a member of Control Group A and was a participating employer in Control Group A's plan.  Client A was sold and is now part of Control Group B.  Control Group B does sponsor its own plan, but Client A wants to sponsor their own plan (with same provisions as Control Group B's plan.  Does this change your answer?   Would this  be a new plan with Client A as the plan sponsor?

Thanks for posting. As you now propose it, since Company A was NOT the plan sponsor but a participating employer, any new plan set up by Company A as the plan sponsor would be their first plan as sponsor under their EIN and therefore would be 001.