7.11.7  Multiple Employer Plans

Manual Transmittal

July 15, 2013


(1) This transmits revised IRM 7.11.7, Employee Plans Determination Letter Program, Multiple Employer Plans.

Material Changes

(1) This IRM has been updated to reflect current versions of annual revenue procedures.

(2) The term Lead Employer has been removed and replaced with the term Controlling Member throughout the document to describe the employer who sponsors the multiple employer plan.

(3) IRM, Remedial Amendment Cycle (RAC) and IRM, Submission Procedures have been updated to reflect that the Schedule Q and all demonstrations are no longer accepted after May 1, 2012.

Effect on Other Documents

IRM 7.11.7 dated June 05, 2012 is superseded.


Employee Plans Personnel

Effective Date


Robert Choi
Director, Employee Plans
Tax Exempt Government Entities Division  (06-05-2012)
Introduction to Multiple Employer Plans

  1. These procedures are applicable to Employee Plans (EP) Determinations specialists and EP Determinations Quality Assurance Staff (QAS) reviewing an application for a determination letter (DL) for a multiple employer plan.

  2. A multiple employer plan is a plan maintained by two or more employers who are not related under IRC 414(b) (controlled groups), IRC 414(c) (trades or businesses under common control), or IRC 414(m) (affiliated service groups). If a group of employers were related under these code sections they would be treated as a single employer.


    Multiple employer plans are not the same as multiemployer plans. For multiemployer plans, see IRC 414(f) and IRM 7.11.6, Employee Plans Determination Letter Program, Multiemployer Plans.

  3. Multiple employer plans are subject to qualification rules under IRC 413(c).  (07-15-2013)
Important Definitions

  1. The following terms are used when working with multiple employer plans:

    Term Definition
    Participating Employer Any employer that participates in the multiple employer plan.
    Controlling Member The Participating Employer who sponsors the multiple employer plan.
    Controlling Plan The plan submitted by the Controlling Member.
    Single Plan A plan under which all of the assets, on an ongoing basis, are available to pay the benefits to employees who are covered by the plan and their beneficiaries. Treas. Reg. 1.414(l)-1(b)(1). A multiple employer plan is a single plan (not to be confused with single employer plan). See Reg. 1.413-2(a)(2) and then Reg. 1.413-1(a)(2).
    Single Employer Plan A plan maintained by one employer. All employers related under IRC 414(b), IRC 414(c), or IRC 414(m) are treated as a single employer. A single employer plan is not a multiple employer plan.  (06-05-2012)
Qualification Requirements for a Multiple Employer Plan

  1. Multiple employer plans are subject to the qualification rules under IRC 401(a), such as eligibility, vesting, distribution rules, etc. However, some rules are applied differently:

    1. Certain qualification requirements are applied as if all employees of each Participating Employer are employed by a single employer. These include: IRC 401(a), exclusive benefit requirement; IRC 410(a), eligibility to participate; IRC 411, vesting; and IRC 415, limitations on benefits/contributions.


      Service with one employer is treated as service with the other employers for determining if an employee is eligible to participate. See Treas. Reg. 1.413-2(b).


      Benefits/contributions and compensation received from all of the employers maintaining the plan must be taken into account when applying the IRC 415 limits. See Treas. Reg. 1.415(a)-1(e).

    2. Other qualification requirements are applied to each Participating Employer as if that employer maintained a separate plan, These include: IRC 401(a)(4), nondiscrimination; IRC 410(b), coverage; and IRC 416, top-heavy.


      The coverage requirements of IRC 410(b) are applied to a multiple employer plan on an employer-by-employer basis. Therefore, each unrelated employer performs separate coverage testing with respect to its portion of the plan and they do not have to use the same testing rules. See Treas. Reg. 1.413-2(a)(3)(ii) and 1.410(b)-7(c)(4)(i)(A) & (c)(4)(ii).

    3. Careful attention should be paid to IRC 415, limitations on benefits/contributions and IRC 416, top-heavy requirements, when an employer participates in a multiple employer plan and also sponsors other plans. All plans that an employer participates in must be taken into account when applying the limitations of section 415 and the top-heavy requirements of section 416. The multiple employer plan should provide that where a Participating Employer sponsor another plan, the 415 and 416 requirements include all plans of the Participating Employer.

  2. The failure of one Participating Employers or the failure of the plan itself to satisfy a qualification requirement will result in the disqualification of the plan for all Participating Employers. See Treas. Reg. 1.413-2(a)(3)(iv).


    If one Participating Employer fails to satisfy the top-heavy rules then the multiple employer plan is disqualified for all of the employers in the plan. See Treas. Reg. 1.416-1, Q&A G-2.  (07-15-2013)
Remedial Amendment Cycle (RAC)

  1. Rev. Proc. 2007-44, 2007-28 IRB 54 section 9 provides for a five-year remedial amendment cycle (RAC) and section 10.03 provides for exceptions to that five-year remedial amendment cycle. Under the exceptions, all multiple employer plans (except governmental multiple employer plans) will fall in "Cycle B" of the five-year RAC for individually designed plans.

  2. Governmental multiemployer plans meet the exception under Rev. Proc. 2007-44 section 10.04 and could be submitted under "Cycle C" or "Cycle E" . Rev. Proc. 2012-50, 2012-50 IRB 708.

  3. Rev. Proc. 2007-44 section 11.01(6) states that if a plan changes its status by becoming or ceasing to be a multiple employer plan, the five-year RAC of the plan is thereafter determined as provided in section 9 or 10, as applicable, on the basis of the changed status of the plan.

  4. If the adopter of a multiple employer plan submits an application without the Controlling Plan, return the application on a 1015 letter and refund the user fee, if applicable. The specialist should instruct the employer to review the procedures in section 10.05 of Rev. Proc. 2013-6, 2013-1 IRB 198 (revised annually) and resubmit their plan with the Controlling Plan. If any employer adopts a multiple employer plan after the favorable determination letter is issued, the employer may still rely on the letter issued to the Controlling Plan for all requirements except IRC 415 and 416, if the employer maintains or has ever maintained another plan.  (07-15-2013)
Submission Procedures

  1. A Controlling Member may request a determination letter for the Controlling Plan in the name of only the Controlling Member. If the Controlling Member requests a determination letter, some or all Participating Employers may also submit requests for their own determination letter. See section 10 of Rev. Proc. 2013-6.

  2. An applicant requesting a letter in the name of only the Controlling Member will submit one Form 5300, Application for Determination for Employee Benefit Plan, either including or omitting the design-based safe harbor questions. The user fee for a single employer plan will apply. Any other Participating Employer maintaining the multiple employer plan can rely on the favorable DL without having to request its own except with respect to the requirements of IRC 415 and IRC 416, if the employer maintains or has ever maintained another plan.

  3. An applicant requesting a letter in the name of the Controlling Member and one or more Participating Employers maintaining the plan will submit the filing required in (2) above as well as a separate Form 5300 application, completed through line 8, and, if applicable, a completed adoption agreement, for each Participating Employer requesting a separate letter. Each employer may elect to respond to the Form 5300 questions either including or omitting the design-based safe harbor questions. The user fee for this type of application will be determined under the user fee schedules for multiple employer plans in section 6.05 of Rev. Proc. 2013-8, 2013-1 IRB 237 (revised annually).  (06-05-2012)
Additional Application Procedures

  1. Power of Attorney (POA) -- Form 2848. Each separate Participating Employer who wishes to appoint a POA should submit their own individual Form 2848, Power of Attorney and Declaration of Representation. By definition, the separate employers are not related by ownership or a substantial service relationship so they do not have the authority to execute a Form 2848 for each other. The Instructions to Line 1 of Form 2848, require the plan name, Employee Identification Number (EIN) of the plan sponsor, three-digit plan number, and business address of the plan sponsor.


    In situations where the qualification requirements are applied as if all employees of each employer are employed by a single employer, only the Controlling Member would need to submit a Form 2848. See IRM, Qualification Requirements of a Multiple Employer Plan. For example, if a multiple employer plan (e.g., 50 adopters) received a favorable DL, but subsequently is amended to change the minimum age requirement from "21" to "18" , and submits a Form 5300 application to the Service for a DL, only the Controlling Member would be required to submit a Form 2848.

  2. Who Signs the Application? The Instructions to Form 5300 provide that "The application must be signed by the employer, plan administrator or authorized representative." If one representative signs the Forms 5300 for multiple employers, each separate employer is required to execute its own Form 2848 as to that one representative. If a plan administrator signs the Form 5300 for multiple employers, the employee plans specialist should obtain a copy of the authorizing document, i.e., the written instrument specifically empowering the plan administrator to sign the DL application forms for the respective employers. See IRC 414(g) for definition of plan administrator.

  3. Employee Plans-Exempt Organizations Determination System (EDS) Establishment. Since October 2000, the Service has established each separate employer for multiple employer plans on EDS as a separate entity module with its own case number and file folder number. The current EDS entity screen data on each employer indicates "M" for multiple employer plans under "Entity Type" (Line 7(h) of Form 5300). While the Controlling Member for a multiple employer plan was previously assigned a plan number of 333, this is no longer necessarily true. Currently Controlling Member plan numbers will only be 333 if designated as such on Form 5300 by the Controlling Member.

  4. Tax Exempt Quality Measurement System (TEQMS) Selection. Only the Controlling Member plan is subject to TEQMS selection. If the Controlling Member plan is selected for TEQMS review, each adopting employer plan must be sent to the QAS. However, if the Controlling Member plan is not selected for TEQMS review, but one or more of the adopting employer plans are selected for TEQMS review, contact the TEQMS analyst to remove the case from the TEQMS selection. See IRM 7.11.3, Tax Exempt Quality Measurement System (TEQMS).

  5. Mandatory Selection. If the Controlling Member plan is selected for mandatory review, or one of the adopting employers of the multiple employer plans is selected for review, the entire multiple employer plan must be sent to QAS.

  6. Determination Letter Generation. Each separate employer who submits a Form 5300 will receive their own employer-specific DL. This allows the Service to retain a record of the DL for each employer for future retrieval if necessary. The caveats used for each employer may differ depending on various circumstances, e.g., receiving additional information to change the scope of reliance or differing execution dates. The specialist must also include caveat 55 for all multiple employer plans issued a Letter 2002 (DO/CG) Favorable Determination Letter.

    EDS Paragraph 55
    "Based on the information you have supplied, you are a participating employer in a multiple employer plan under section 413(c) of the Code."

  7. Determination Letter Generation for Terminating Plans. Terminating multiple employer plans will be treated similar to ongoing plans. Each application submitted will still receive its own DL. The caveats used for each employer may still vary depending upon the request and its individual circumstances. One difference from an ongoing plan is that no special caveat is used on a Letter 1132 (DO/CG) which indicates that a plan is participating in a multiple employer. Also, for all defined benefit and under-funded defined contribution plans, each separate employer must still submit a Form 6088, Distributable Benefits from Employee Pension Benefits Plans. See IRM 7.12.1, Plan Terminations for more information.

  8. Separate Case Files. A separate case file should be maintained for each employer in order to clearly document and account for each Form 5300, each Form 2848, the various levels of reliance among the employers, and the differing DLs.  (06-05-2012)
Quality Assurance Staff Review of Multiple Employer Plans

  1. Multiple employer plans present a logistical challenge for QAS. For example, the specialist must submit all related applications to QAS when a "lead" multiple employer plan is selected for TEQMS review or when a Participating Employer is subject to mandatory review, e.g., because of interested party comments.

  2. To streamline the review and avoid some of these logistical challenges, specialists who are assigned multiple employer plans may, but are not required to, contact the Manager, EP Determinations Quality Assurance for help setting up an individualized review strategy.

  3. The review strategy may involve:

    • In-depth pre-review of the case files by a QAS reviewer.

    • Discussions as to which items and amendments should be requested in the specialist's 1196 letter to the plan sponsor/POA.

    • A plan for continued monitoring of the case's progress.

    • An approach to handling the end-stage TEQMS or mandatory review evaluations.

  4. This approach partially unifies the working of the case and its review. The purpose is to minimize the number of contacts with the group of employers and POA(s) and to streamline the review process through front-end participation by QAS.

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