If due to a change in ownership, an employer is no longer a member of a controlled group and had originally adopted the sponsoring employer's prototype, would this employer have to adopt their own plan as a single employer due to the fact that multiple employer plans cannot adopt prototypes? I would like to avoid having to draft an individually designed document.

Also, at what point does the status of the plan change from a controlled group to a multiple employer plan? As of the date of the change in ownership or beginning of next plan year?

Are you sure that multiple employer plans cannot adopt prototypes? Or was it that multiple employer plans could not rely on the opinion letter for a standardized prototype?

Do you want to have a separate plan and trust for the employer? Or do you want to participate in a multiple employer plan?

I believe that the change occurs at the date of the change in status.

Your correct, a multiple employer plan could adopt a prototype but would have to submit to the IRS for approval. We are trying to avoid having to prepare a submission.

I am assuming then that our only other alternative would be to have the employer establish a separate plan as a single employer.

You can draft the multiple er plan onto a volume submitter document. If drafted by one which has received an IRS opinion letter, the employers will have reliance on the document without having to submit to the IRS.

One of my clients is going through this now and I am spinning off one of the members (now unrelated) to their own plan starting the first of the next plan year. The division was sold in 2002 and I elected to test it as a single employer plan for 2002 and treat them as separate starting in 2003.

Are multiple employer plans permitted to adopt a volume submitter document? I thought both prototype and volume submitter documents are excluded?

I use Corbel and they have a DC Volume Submitter document which allows for multiple er plans. However, you are correct that these cannot be supported by prototypes (ns or standardized).