7.11.7 Multiple Employer Plans

Manual Transmittal

August 23, 2019


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

Material Changes

(1) IRM (1) was updated to change the reference for Delegation Order 7-1a from IRM to IRM, and the reference for Delegation Order 7-1d from IRM to

(2) IRM was updated to reflect current Revenue Procedures.

Effect on Other Documents

This supersedes IRM 7.11.7 dated July 17, 2018.


Tax Exempt and Government Entities
Employee Plans

Effective Date


Robert S. Choi
Director, Employee Plans
Tax Exempt and Government Entities

Program Scope and Objectives

  1. Purpose: This IRM describes the procedures for reviewing Employee Plans (EP) Determination Letter (DL) applications for multiple employer plans.

  2. Audience: EP Determinations and Quality Assurance (QA) staff

  3. Policy Owner: Director, EP

  4. Program Owner: EP

  5. Program Goals: The goal of EP Determinations is to help plan sponsors ensure that their plans are in compliance with the tax laws by issuing determination and opinion letters and to protect the public interest by applying the tax law with integrity and fairness to all.


  1. A plan is qualified if it meets the requirements of IRC 401(a) in form and operation. A qualified plan is entitled to favorable tax treatment.

  2. To help taxpayers ensure that their plans comply with the tax law, EP issues DLs, opinion letters, and advisory letters on whether the form of the plan meets the qualification requirements. See IRM 7.11.1.

  3. 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)

    • IRC 414(m) (affiliated service groups).


      If a group of employers are related under these code sections, they’d be treated as a single employer.

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

  5. Multiple employer plans must comply with the qualification rules under IRC 413(c).


  1. See table below for the relevant authority for EP DLs.

    Legal Authority Description or Delegated Authority to
    Rev. Proc. 2019-4 (revised annually), section 14 DL filing procedures for individually designed multiple employer plans.
    Rev. Proc. 2016-37 Circumstances in which a plan sponsor may submit a DL application to EP.
    Delegation Order 7-1a Issue DLs on the qualified status of pension, profit-sharing, stock bonus, annuity, and employee stock ownership plans to the Director, EP. IRM
    Delegation Order 7-1d Allow a plan to be amended after the expiration of its IRC 401(b) remedial amendment period to the Director, EP Rulings and Agreements. IRM
  2. Find a complete list of delegation orders governing EP Rulings and Agreements at Delegation Orders by Process

  3. See IRM Exhibit 7.1.1-1 for a complete list of the major EP revenue procedures currently in effect.


  1. These acronyms are used in this IRM:

    Acronym Term
    COLA Cost of Living Adjustment
    DL Determination Letter
    EDS Employee Plans-Exempt Organizations Determinations System
    EP Employee Plans
    HCE Highly Compensated Employee
    POA Power of Attorney
    QA Quality Assurance
    RAC Remedial Amendment Cycle
    TEDS Tax Exempt Determination System
    TEQMS Tax Exempt Quality Measurement System
    VS Volume Submitter


  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 (Plan Sponsor or Lead Employer) The participating employer who sponsors the multiple employer plan.
    Controlling Plan (Lead 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. 26 CFR 1.414(l)-1(b)(1). A multiple employer plan is a single plan (not to be confused with Single Employer Plan). See 26 CFR 1.413-2(a)(2) and then 26 CFR 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.

Qualification Requirements for a Multiple Employer Plan

  1. Multiple employer plans must comply with 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, limits on benefits/contributions. See Exhibit 7.11.7-1, Specific Law Provisions And How They Apply To A Multiple Employer Plan.


      An employee's service with one employer is treated as service with the other employers to determine if the employee is eligible to participate. See 26 CFR 1.413-2(b).


      A participant's benefits/contributions and compensation received from all of the employers maintaining the plan must be counted when applying the IRC 415 limits. See 26 CFR 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. See Exhibit 7.11.7-1, Specific Law Provisions And How They Apply To A Multiple Employer Plan.


      The coverage requirements under IRC 410(b) are applied to a multiple employer plan on an employer-by-employer basis. Therefore, each unrelated employer performs separate coverage testing for its part of the plan and they don’t have to use the same testing rules. See 26 CFR 1.413-2(a)(3)(ii) and 26 CFR 1.410(b)-7(c)(4)(i)(A) & 26 CFR 1.410(b)-7 (c)(4)(ii).


      The Actual Deferral Percentage (ADP) test under IRC 401(k)(3) and the Actual Contribution Percentage (ACP) test under IRC 401(m)(2) are also applied on an employer-by-employer basis. See 26 CFR 1.401(k)-1(g)(11). Participating employers don’t have to meet the same ADP/ACP testing rules. Review the plan document for testing and correction provisions.


      Top-heavy status under IRC 416 is applied on an employer-by-employer basis. Each participating employer whose portion of the plan is top-heavy must apply the correct vesting schedule under IRC 416(b) and provide the appropriate minimum benefit/contribution. See 26 CFR 1.416-1, Q&A G-2 and T-8.

    3. Pay careful attention to IRC 415, limits on benefits/contributions and IRC 416, top-heavy requirements, when an employer participates in a multiple employer plan and also sponsors other plans. You must consider all plans in which an employer participates when applying section 415 limits and section 416 top-heavy requirements. The multiple employer plan should state that when a participating employer sponsors another plan, the 415 and 416 requirements include all plans of the participating employer.

  2. If one participating employer fails a qualification requirement or if the plan itself fails to satisfy a qualification requirement, then the plan will be disqualified for all participating employers. See 26 CFR 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 26 CFR 1.416-1, Q&A G-2.

Submission Period

  1. Effective January 1, 2017, the Remedial Amendment Cycle (RAC) system was eliminated and a plan sponsor of an individually designed plan is permitted to submit a DL application for:

    • Initial plan qualification

    • Qualification upon plan termination

    • In other circumstances that the IRS will announce


      See Rev. Proc. 2016-37, section 4.

  2. A controlling member of a Volume Submitter (VS) multiple employer plan (eligible to receive a DL per Rev. Proc. 2019-4, section 14.02) that makes minor modifications to the VS multiple employer, may apply for a DL on Form 5300 in the two-year window in Rev. Proc. 2019-4, section 13.03, regardless of whether the IRS issued a prior favorable DL for the plan. Rev. Proc. 2019-4, section 12.

  3. Before January 1, 2017, all multiple employer plans (except governmental multiple employer plans) submitted their DL applications in "Cycle B" of the five-year RAC for individually designed plans. Rev. Proc. 2007-44, section 10.03.

  4. Under the RAC system, governmental multiple employer plans met the exception under Rev. Proc. 2007-44, section 10.04 and could have been submitted under "Cycle C" or "Cycle E" per Rev. Proc. 2012-50.

  5. Under the RAC system, if a plan changed its status to become or cease to be a multiple employer plan, the plan's five-year RAC was then determined under section 9 or 10, whichever applied based on the plan’s changed status. Rev. Proc. 2007-44, section 11.01(6).

Submission Procedures

  1. A controlling member may submit an application for a DL using their name only. See Rev. Proc. 2019-4, section 14.


    Before January 1, 2017, participating employers were permitted to request their own DLs when the controlling member requested one.

  2. If a participating employer (who is not the controlling member) submits an application (or, before January 1, 2017, submits one without the Controlling Plan), close the case incomplete (don’t return the hardcopy of the case), issue a refund (if applicable), and issue a 1924 letter with caveat 10 with variable "Rev. Proc. 2019-4" .

  3. An applicant requesting a letter in the name of the controlling member only submits a 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 applies. Any other participating employer and any other employer who adopts the plan may rely on the favorable DL except for IRC 401(a)(4), IRC 401(a)(26), IRC 401(l), IRC 410(b), and IRC 414(s), and, if the employer maintains or has ever maintained another plan, IRC 415 and IRC 416.

  4. Before January 1, 2017, an applicant requesting a letter in the name of the controlling member and one or more participating employers maintaining the plan submitted:

    • The application in IRM (3) above

    • A separate Form 5300 application, completed through line 8. Each employer could elect to respond to the Form 5300 questions and either include or omit the design-based safe harbor questions.

    • If applicable, a completed adoption agreement, for each participating employer requesting a separate letter

    • User fee for multiple employer plans in Rev. Proc. 2019-4, Appendix A

Additional Application Procedures for DLs With a Control Date Before January 1, 2017

  1. The procedures in this section only apply to DL applications for participating employers with a control date before January 1, 2017, except for the caveat requirement in IRM (7), which applies to all multiple employer plans.

  2. POA -- Form 2848. Each separate participating employer who wishes to appoint a POA should submit its own 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 don’t have the authority to execute a Form 2848 for each other.


    If the qualification requirements are applied as if all employees of each employer are employed by a single employer, only the controlling member needs to submit a Form 2848. See IRM, Qualification Requirements of a Multiple Employer Plan.


    A multiple employer plan with 50 adopters received a favorable DL but subsequently amends its minimum age requirement from "21" to "18" . They may submit a Form 5300 application for a DL, and only the controlling member is required to submit a Form 2848.

  3. Who Signs the Application? The Instructions to Form 5300 note 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 to authorize that one representative. If a plan administrator signs the Form 5300 for multiple employers, the specialist should obtain a copy of the authorizing document, in other words, 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.

  4. Employee Plans-Exempt Organizations Determination System (EDS) Establishment. Since October 2000, the IRS has established each separate employer for multiple employer plans on EDS as a separate employer with its own case number and file folder number. The current EDS entity screen data for each employer lists "M" for multiple employer plans under "Entity Type" (Form 5300, Line 6(i)). IRS previously assigned the controlling member for a multiple employer plan a plan number of 333, but we don’t anymore unless the controlling member specifically lists 333 as the plan number on the Form 5300.

  5. Case Closure Procedures/Tax Exempt Quality Measurement System (TEQMS) Selection. If one or more of the participating employers’ applications is subject to mandatory review, see IRM (6) below. Otherwise:

    1. Close all related multiple employer plan applications at the same time.

    2. Assemble them into one batch and close to your group secretary. Clearly identify the controlling plan.

    3. Create a cover memo stating the controlling member’s name and EIN and all of the participating employers names in the batch and submit to your secretary.

    4. Group secretaries must close the controlling plan first to determine if it is selected for TEQMS review.

    5. If the controlling plan is selected for TEQMS review, also send each participating employer’s plan to Quality Assurance (QA).

    6. If the controlling plan is not selected for TEQMS review, but one or more of the adopting employer plans are, contact the TEQMS analyst to remove the case from the TEQMS selection because only the controlling plan is subject to TEQMS per IRM 7.11.3, Tax Exempt Quality Measurement System (TEQMS).

  6. Mandatory Review. If the controlling member or any of the participating employers are subject to Mandatory Review (in other words, they have interested party comments or any other reason), you must update all the related multiple employer cases for Mandatory Review and send to QA. Complete a Form 3198, TE/GE Special Handling Notice, for each case and close all of them to your group secretary. Clearly identify the controlling plan. The group secretary sends all of the cases to QA.

  7. Determination Letter Generation. Each separate employer who submits a Form 5300 will receive its own employer-specific DL. This allows the IRS to have a record of each employer’s DL, if needed for future retrieval. The DL caveats for each employer may differ depending on various circumstances, such as, your receiving additional information to change the scope of reliance or differing employer execution dates. Include caveat 55 on Letter 5274 issued to all multiple employer plans.

    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."
  8. Determination Letter Generation for Terminating Plans. Terminating multiple employer plans are treated the same as ongoing plans. Each application submitted receives its own DL. The DL caveats for each employer may still vary based on the DL request and individual circumstances.


    One difference from an ongoing plan is that we don't use a special caveat on a Letter 1132 to indicate that a plan sponsor is a participating employer in a multiple employer plan. 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.

  9. Separate Case Files. Keep a separate case file for each employer to clearly document each:

    • Form 5300

    • Form 2848

    • Employer’s level of reliance

    • Employer’s DL

Specific Law Provisions And How They Apply To A Multiple Employer Plan

This chart indicates how specific law provisions are applied to a Multiple Employer Plan

Code Section Must be Met by Multiple Employer Plan Must be Met by Each Participating Employer Authority
IRC 401(a) - Qualification requirements Yes   26 CFR 1.413-2(a)(3)(iv).
IRC 401(a) -Exclusive benefit rule Yes   IRC 413(c)(2) and Professional Employer Organization Rules in Rev. Proc. 2002-21.
IRC 401(a)(4) - Nondiscrimination   Yes 26 CFR 1.413-2(a)(3)(iii) and 26 CFR 1.401(a)(4)-1(c)(4)
IRC 401(a)(26) - Minimum Participation (DB Plans)   Yes 26 CFR 1.401(a)(26)-2
IRC 401(k) /IRC 401(m) - ADP/ACP   Yes 26 CFR 1.401(k)-2(a)3(ii)(A) and 26 CFR 1.401(k)-1(b)(4)
IRC 404 - Deduction Adopted before 1989 Adopted after 1988 IRC 413(c)(6)
IRC 410(a) - Eligibility Yes   IRC 413(c)(1)
IRC 410(b) - Coverage   Yes 26 CFR 1.410(b)-7(c)(4)(i)(A) and 26 CFR 1.410(b)-7(c)(4)(ii)
IRC 411 - Vesting Yes   IRC 413(c)(3) and 26 CFR 1.413-2(d)
IRC 412/IRC 430 - Funding Adopted before 1989 Adopted after 1988 IRC 413(c)(4)
26 CFR 1.414(l)-1 - Mergers or Transfer of Assets - see note below Yes   26 CFR 1.414(l)-1(b)(1)
IRC 414(q) - Definition of Highly Compensated Employee   Determination is made separately by each adopting employer 26 CFR 1.414(q)-1(T), Q&A 1
IRC 414(v) - Catch-up Contributions Yes   26 CFR 1.414(v)-1(f)
IRC 415 - Limitations on Benefits All compensation is included   26 CFR 1.415(a)-1(e)
IRC 416 - Top-Heavy   Yes 26 CFR 1.416-1, Q&A G-2 and T-8


Mergers or Transfer of Assets - all assets available to pay benefits of employees covered under the plan must apply to the multiple employer plan as a whole.