A multiple employer plan is sponsored by multiple unrelated companies or companies that do not share sufficient ownership to be considered a controlled group under the Internal Revenue Code.

In some ways, a multiple employer plan is treated as two separate plans. For example, the sponsoring employers are each responsible for funding contributions solely for their own employees. Each employer is also subject to separate testing under the plan. However, the employers benefit from the simplified documentation and administration of having one multiple employer plan rather than separate plans. Only one plan document needs to be maintained and only one 5500 needs to be filed each year. In addition, there is only one plan trust to be valued on an ongoing basis. Although the cost for administering one multiple employer plan is generally less than that charged for separate plans, an additional annual fee must be charged when a plan adds an employer to compensate for the additional testing and payroll processing.

When adding a new employer to an existing plan, the plan sponsor should consider whether or not to grant credit under the Plan for the employees' service with the adopting employer before the date it adopts the plan. Prior service credit will affect the date employees are eligible to enter the Plan and their level of vesting. Another option available to the plan sponsor is the establishment of an immediate entry date for all employees of the adopting employer as of the date the plan is adopted.

Multiple employer plans are most advantageous for employers who have some level of shared ownership, operate in similar industries, or share HR or payroll functions. Companies that are geographically dispersed, have widely disparate census demographics, or wish to offer different benefits to their employees may be better served by sponsoring separate plans.