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Brother-Sister Controlled Group


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#1 Guest_named_Enda80_*

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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

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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

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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

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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.