I need to educate myself on issues specific to preparation of Form Series 5500, non-discrimination testing (ADP/ACP/MUT) and "top-heavy" determination as it relates to Professional Employer Organizations (PEO's).

It is my understanding that a Plan maintained by a PEO is to be treated as a multiple employer plan, therefore coverage requirements,non-discrimination testing and top-heavy determination is applied on an employer by employer basis.

A multiple employer plan with 100 or more participants at beginning of plan year must file Form 5500 and related schedules and an "abbreviated" Form 5500 C/R for each participating employer.
I have been given conflicting opinions as to wether an "abbreviated" Form 500 C/R must be attached to filing.Can anyone advise?

Thanks!!!

I have limited dealing with these plans, but this is how we handled it. The adopting employers file a C/R regardless of participant size. Line item 4 = F. Plan number is 001, 002, etc. Then complete lines 1-6a, 7a, and 21.

The sponsoring employer (the leasing company) files a 5500 and reports all line items including assets / liabilities and audit. Line item 4 = E and plan number is 333.

The sponsoring employer does not attach copies of the c/r filing for each adopting employer. Each adopting employer must sign and file separate 5500 c/r.

The confusing, and not a lot of guidance on, is what happens when an adopting employer leaves the multiple employer plan and transfer assets to a single employer plan. Is this single employer plan reported as a new plan or plan amendment? If plan admendment, how do you report beginning of year assets if amendment happended mid year?

[This message has been edited by JB2 (edited 01-14-99).]