Q. A 501(c)3 ministry in Florida has a main office and 12 chapters throughout the state, all of which operate under the same employer identification number (EIN). They want to set it up with discretionary employer contributions with a cap at 4%. Each chapter contributes different amounts depending on their financial situation. Could one set the plan up under the main entity and have the chapters as participating employers, given that they all operate under the same EIN, or would it be better for each chapter to have their own separate plan?
A. Whether you set them up as separate entities and separate plans or under one plan, they will all be the same employer for testing purposes. This is one employer under the controlled group rules. If you set them up in one plan with different divisions or groups, you can track the different contribution allocations. Another option is to set them up under a comparability allocation and then test them under the 401(a)(4) allocation test.