Doctor A owns 100% of Practice (C-Corp.) and employs Doctor B's S-Corp. (Medical Corp.). Doctor B's S-Corp. funnels some money to another C-Corp. (owned not by Dr. B, but 100% owned by Irrevocable Trust). For purposes of this question, let's disregard the actual amount paid from Doctor B's S-Corp. to the C-Corp. owned by the Irrevocable Trust (another issue LOL). The C-Corp. owned by the Irrevocable Trust maintains a qualified plan. As you might have guessed, Dr. B. is the only participant in the qualified plan. Doctor B will soon purchase 50% of Practice. Three years later, Doctor B will purchase the remaining 50% of Practice.

I think the Irrevocable Trust still results in a finding that a controlled group does not exist.

Any argument (that would withstand an IRS challenge) that this is not an affiliated service group? I'm guessing that your answers will be no.

Thanks for your assistence.

Ed

What qualifies Dr. B to be a participant in the qualified plan of the C-corp? He is neither an employee nor officer, is he?

Who is the plan of the C-corp established for?

Dr. B is the only employee of the C-Corp. owned 100% by the Irrevocable Trust. C-Corp.'s plan is maintained for eligible employees of C-Corp. It would seem that the Practice is an FSO. The S-Corp. would be considered an A-Org. because Doctor B regularly performs services for the FSO and is a shareholder in the FSO. However, amounts sent from S-Corp. to C. Corp. owned by Irrevocable Trust are not related to Dr. B's provision of services to FSO. Might be a stretch, but an argument could be made that C-Corp. could still maintain a plan covering only Doctor B.

Any thoughts? Your responses are greatly appreciated.

Ed