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Single, Multi and Multiple: What is the Difference?

Posted in Plan Administration, Retirement Plans, Welfare Plans

As plan sponsors continue to work through through PPACA compliance, there has been some discussion about what type of plans are being sponsored.  I have also had some employers come to me recently and tell me that they have always thought they one type and discovered they were another.  So I thought it might be productive to at least look at the basics of whether you have a single employer, multiple employer or multiemployer plan.

Generally, a single employer plan is just that.  It is a plan sponsored by one employer or a group of employers under a common control structure and also may not be collectively bargained.  This “control group” issue is one that can sometimes be problematic for plan sponsors.  If a plan covers employees of more than one employer, but the employers are all part of the same control group, then the plan is really a single employer plan.  So employers who are part of a control group (Code Section 414(a)), trades or businesses under common control (Section 414(c)) or affiliated service groups (Section 414(m)), are treated as a single employer and they have a single employer plan.

Multiple employer plans can look a lot like single employer plans except that the employers who sponsor the plans are not part of a control group.  A multiple employer plan is a single plan, but it has multiple non-control group employers that sponsor it.  It has separate rules that apply to it under Section 413(c).  But the distinction between single and multiple is important because you can see they are both tied closely to the control group rules.  It is not uncommon for sponsors to assume that companies with separate employer identification numbers are separate and create a multiple employer plan.  This mistake can create real problems both from a reporting and compliance perspective because they are actually governed by different rules. 

Now multiemployer plans are a completely different animal from multiple employer plans.  A multiemployer plan is a collectively bargained plan maintained by more than one employer, usually within the same or related industries, and a labor union.  These plans are often referred to as “Taft-Hartley plans”.  In the case of a multiemployer plan, control group concerns are not the defining characteristic.  Instead, a multiemployer plan is defined by the existence of a collective bargaining agreement between a union and multiple employers, even if some of those multiple employers are part of the same control group.  However, employers who are part of a control group are treated as a single employer when they are in a multiemployer plan, which can have serious consequences when considering withdrawal liability.

Each of these types of plans are subject to different tehcnical requirements so it is important to know what you are and use the right terminaology when describing what type of plan you participate in.  Don’t confuse your single as a multiple or your multiple as a multi.  For reporting and compliance this can be a problem.  And if you have questions about what your plan might be, make sure to ask.