Retirement Plans FAQs regarding Multiple Employer Plans
A multiple employer plan is a plan maintained by two or more employers who are not related. For more on these plans, see Internal Revenue Manual Section 7.11.7. See Determination, Opinion and Advisory Letters for more on applying for a determination letter.
These frequently asked questions and answers provide general information and should not be cited as legal authority.
Does each adopting employer have to come in for an individual determination letter?
No, it's not necessary for all adopting employers to apply for a determination letter on Form 5300, Application for Determination for Employee Benefit Plan. The sponsors of the plan have two choices:
- Submit just for a determination letter on the plan; or
- Submit for letter on the plan and a letter for each employer maintaining the plan who wants an individual letter. See Revenue Procedure 2016-6, section 10.
Are the adopting employers required to give Notice to Interested Parties if they are not coming in for individual letters?
Yes, each employer must provide notice to interested parties. The rule permitting one consolidated determination letter for a multiple employer plan does not change the "Notice to Interested Parties" requirement.
Do the employers maintaining the plan have reliance on the determination letter issued to the plan?
Yes. Revenue Procedure 2016-6, section 10, states: "An employer maintaining a multiple employer plan can rely on a favorable determination letter issued for the plan except with respect to the requirements of §§ 401(a)(4), 401(a)(26), 401(l), 410(b) and 414(s), and, if the employer maintains or has ever maintained another plan, §§ 415 and 416."
Is a volume submitter plan’s submission cycle affected if it changes to a multiple-employer plan?
No, conversion of a volume submitter (VS) plan to a multiple-employer plan does not take the plan off of the 6-year remedial amendment cycle. A VS plan may be designed to be used as either a single-employer or as a multiple-employer plan. Conversion occurs when the adopting employer decides to allow an unrelated employer to also adopt its VS plan. Even if the employer had to modify the VS plan to allow it to be used as a multiple-employer plan, this would not remove the employer from the 6-year cycle because a multiple employer plan is not an impermissible plan type for a VS plan.
What form is used to request a determination letter for a VS plan that was modified to be a multiple-employer plan?
An employer requesting a determination letter for a VS plan that was modified for use as a multiple-employer plan should file Form 5300 (not Form 5307). The Form 5300 has to be used because the Form 5307 does not accommodate filings by multiple- employer plans. If the employer has not modified the VS plan at all, for example, because the VS plan allows for use as either a single-employer or as a multiple-employer plan, the employer has reliance on the VS advisory letter issued to the document provider and should not file for its own determination letter.