BenefitsLink logo
EmployeeBenefitsJobs logo

Search the News

Featured Jobs
Client Relationship Manager
Account Manager
Retirement Plan Administrator
ESOP Administrator
Search all jobs
Get the BenefitsLink app for iPhone and iPad LinkedIn

Jump to content

Brother-Sister Controlled Group

  • Please log in to reply
3 replies to this topic

#1 Guest_named_Enda80_*

  • Unregistered (or Not Logged In)

Posted 19 January 2008 - 08:42 PM

Hypothetical situation: Is is still a brother-sister controlled group if the same people own both companies, with substantially similar ownership shares in both cases, but there are no common employees in the two companies?

#2 John Feldt ERPA CPC QPA


    John Feldt, CPC, QPA

  • Registered
  • 1,857 posts

Posted 19 January 2008 - 10:43 PM

Yes, as long as both the 80% common and 50% identical tests for ownership are met (using 5 or fewer owners).

#3 bzorc


    Registered User

  • Registered
  • 275 posts

Posted 19 March 2008 - 08:11 AM

Let's make this a fun hypothetical. Assume both companies have employees (non common to both), and both companies maintain a 401(k) Plan. One company matches, the other doesn't. Wouldn't the controlled group rules require the nonmatching company to match, or vice-versa? That is, don't the benefits offered by both plans have to be identical? I have this exact situation going on now, where a brother-sister controlled group both set up 401(k) plans with non-similar features. This was brought to our attention just yesterday!

#4 Jim Chad

Jim Chad

    Registered User

  • Registered
  • 1,028 posts

Posted 03 April 2008 - 08:02 AM

NO, I do not think they would both have to offer the same match. I think they just have to pass coverage.

Think of this as if it were one company with 2 locations or 2 divisions. Depending on the mix of HCEs and NHCEs, it might pass coverage. And then, of course, you would have to do the ACP test. I think the ACP test would include only the participants in the division receiving a match.