Affiliated Service Group Questionnaire

Have a prospect (existing plans) that may be in an ASG and may not be aware of the rules.   Does anyone know of a fairly simple questionnaire that can be sent to the prospect to start the screening for this?   Thanks for any help.

Here's a flowchart from the IRS that may help.  I don't know the date on this and it wouldn't cover all the factors to consider, but could start a conversation on it.

IRS flowchart on ASGs.pdf

14 minutes ago, DMcGovern said:

Here's a flowchart from the IRS that may help.  I don't know the date on this and it wouldn't cover all the factors to consider, but could start a conversation on it.

IRS flowchart on ASGs.pdf 81.93 kB · 0 downloads

Thank you.

In terms of things I could ask a client and expect them to reasonably give me an answer on their own:

• What type of entity is the company?
• What is the principal business of the company?
• Do any of the owners of the company (or their spouses, children, parents or grandparents) have any ownership interest in any other organizations?
• Do any of those other companies have employees?
• Does this company provide services to any of those other companies or vice-versa?
• Are any of the companies regularly associated in providing services to the public?

If the answers to those questions indicate that we need to consider whether an ASG exists, then I would start digging in further. 

9 hours ago, DMcGovern said:

Here's a flowchart from the IRS that may help.  I don't know the date on this and it wouldn't cover all the factors to consider, but could start a conversation on it.

IRS flowchart on ASGs.pdf 81.93 kB · 31 downloads

The flowchart is pretty good but it leaves out what is usually the most difficult part of the analysis, i.e. the ownership attribution rules. If you only had to consider ownership interests actually owned by an individual, the analysis would be about as simple as the flowchart makes it out to be.

9 hours ago, Luke Bailey said:

The flowchart is pretty good but it leaves out what is usually the most difficult part of the analysis, i.e. the ownership attribution rules. If you only had to consider ownership interests actually owned by an individual, the analysis would be about as simple as the flowchart makes it out to be.

I agree with this 100%. I have never seen a spreadsheet, flowchart, etc. that can adequately account for the ownership attribution rules. There are just too many variables. My gut is these rules get overlooked more often than not, especially once you get beyond the easy ones like spouses and wholly owned entities. 

Anybody up for creating a collaboratively-written questionnaire to send to the plan sponsor each year along with the employee census form, including questions to find any demographic changes in attributed ownership (e.g., the plan sponsor's owner got married to an employee during the plan year)?

I haven't done such a collaborative document before, but I've always wanted to give it a go, as an employee benefits community project.

Use Google Docs? Anybody used anything better for such a project?

I've used Google Docs for collaborative editing before, and it's quite good at it, but it does need to be set up correctly to get the most benefit out of it.

My number 1 recommendation when using Google Docs is to assign only a small number of people to the "Editor" role - just 1 or 2. Most people should be "Commenter." Changes made by Commenters do not directly modify the original document, but show up in a different color. The Editor(s) can then approve or reject the suggestions. Suggestions made by Commenters also show up on the side, and you can have a discussion thread attached to each one.

There is also a chat box assigned to the document as a whole, for things that do not fit into a comment discussion thread.

5 hours ago, Dave Baker said:

Anybody up for creating a collaboratively-written questionnaire to send to the plan sponsor each year along with the employee census form, including questions to find any demographic changes in attributed ownership (e.g., the plan sponsor's owner got married to an employee during the plan year)?

I haven't done such a collaborative document before, but I've always wanted to give it a go, as an employee benefits community project.

Use Google Docs? Anybody used anything better for such a project?

Great idea Dave.  Unfortunately I have zippo experience with Google Docs or anything similar.

22 hours ago, C. B. Zeller said:

In terms of things I could ask a client and expect them to reasonably give me an answer on their own:

• What type of entity is the company?
• What is the principal business of the company?
• Do any of the owners of the company (or their spouses, children, parents or grandparents) have any ownership interest in any other organizations?
• Do any of those other companies have employees?
• Does this company provide services to any of those other companies or vice-versa?
• Are any of the companies regularly associated in providing services to the public?

If the answers to those questions indicate that we need to consider whether an ASG exists, then I would start digging in further. 

Yes good suggestions.   In my case, the last two bullets are the critical ones and I would like to get more detailed in the questions; I know the answers to the others.   

On 7/13/2021 at 6:01 PM, C. B. Zeller said:

In terms of things I could ask a client and expect them to reasonably give me an answer on their own:

• What type of entity is the company?
• What is the principal business of the company?
• Do any of the owners of the company (or their spouses, children, parents or grandparents) have any ownership interest in any other organizations?
• Do any of those other companies have employees?
• Does this company provide services to any of those other companies or vice-versa?
• Are any of the companies regularly associated in providing services to the public?

If the answers to those questions indicate that we need to consider whether an ASG exists, then I would start digging in further. 

The penultimate bullet says "Does this company provide services to those companies or vice versa?" but I would phrase that as "Does this company provide services to any other companies or vice-versa?"

ASG rules are not hard and fast, but I think one can get an ASG without any common ownership.

On 8/30/2021 at 1:34 PM, acm_acm said:

ASG rules are not hard and fast, but I think one can get an ASG without any common ownership.

Are you talking about a management group? The definitions of A-org and B-org both reference an ownership interest in the FSO. I agree that the bullet points I mentioned earlier fail to account for management groups.

16 hours ago, C. B. Zeller said:

Are you talking about a management group?

Yes.  

And the rules for determining what is and is not an ASG get murky there. 

It's OK to advise a client to some degree, but ultimately you should to punt to them and their ERISA counsel.

I try to ask some general questions about ownership, spouse ownership, about services and relationships to other businesses, about employees paid via a staffing company, and such.  Keep them simple and non-technical.  If any of these questions gets a positive response, the next step is a phone call.  Just too many variables to reduce to a checklist.  And even if it were reduced to a checklist, it would be too extensive and clients' eyes would glaze over.