Since most of my clients own doctor offices, manufacturing firms, and other small businesses, I'm a little unsure if anything is different for this new case I'm looking at.

A 6 member rock group want to start a 401(k) plan for the group, as well as for the record company that they own. In addition to the 6 band members, there are a few office people, as well as some truck drivers, roadies, ticket agents, and so on. I don't see a problem setting a plan up for this group, but as far as counting hours for eligibility, years of service for vesting, etc., is there a right way to do this? Would elapsed time work best in these situations? I also usually deal with W-2 wages for plan purposes, and I'm curious as to what gets reported as income in a situation like this.

Any thoughts or antedotes are appreciated. Thanks

First thing to do is to talk to the accountant who is responsible for this group's tax filings. Is there a C corporation? An S corporation? Is it a partnership? Who gets W-2s, who gets K-1s, and who gets neither (i.e., a 1099-MISC or nothing) ? These are the types of questions you should ask.

Insofar as service crediting is concerned, don't you always have to ask the client what would make the most sense from it's perspective? It may be that if this group is only interested in the 401(k) feature, with perhaps a small match, or maybe even a safe harbor structure, there would be no need to keep track of service crediting for vesting purposes. Insofar as eligibility is concerned, certainly they could keep track of eligibility on an elapsed time basis.

Just some random thoughts.

Another thought: who do they want to cover? Don't forget 410( b).

I have a related question for you. Do the groupies constitute a fringe benefit under Section 132?

....Is there an affiliated service groupie?

Don't forget that you can test this by carving out the groupies who have less than 1 year of service and have not attained the age of consent.

Unless they are HCGs, that is.

In response to Kirk's question, it constitutes a working condition fringe in Nevada. There is a split of authority as to whether it qualifies as a de minimus fringe benefit.

im curious. who is the band? and did they go 401(k)?

I believe that one of the "seminal" cases with regard to the staute of limitations for fiduciary breach actually invovled the plan set up for the J. Geils Band 76 F.3d. 1245. Of course they lost, how could a judge have sympathy for the band that gave use "My Angel Is The Centerforld"

i saw J. Geils on the "centerfold" tour. u2 opened up for them. i've been curious to know how musicians save for retirement since most are not "employed" by the record label. i thought for the most part, their retirement was left up to the individual musician. i know for years the grateful dead offered benefits to their crew, but its rare to hear of such activity in the music biz.

Among lots of others, you can find "Alice in Chains" and "Pearl Jam" at freeerisa.ocm

Are any of the proposed participants covered by a CBA?

that is, a collective bargaining agreement? If you include them and the union gets involved, it could get much more complicated...