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richard

Controlled Groups

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Person X owns 100% of Companies A and B; hence both companies are in the same controlled group. Both companies have employees, and both are calendar year companies.

Effective June 1, 1999 (for example), X sells his entire interest of Company B to an unrelated person Y.

When are both companies no longer in the same controlled group?

Can Company A set up a pension plan effective June 1, 1999 (say for a 7 month initial plan year) and ignore employees of Company B?

Or, must Company A wait until January 1, 2000 to set up a pension plan? (In other words, are A and B in the same controlled group for the entire 1999 year?)

Or, must Company A wait until 2001 (or later)because ownership (for determining controlled group status) includes ownership interests in the last 5 years?

Would the answers to the above be any different if the original companies were in the same brother-sister controlled group, and the ownership change resulted in them no longer being in the same brother-sister controlled group?

Never dull!

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Guest FredReilly

This is an interesting question, why don't you post this on the Who's the Employer? Q & A column?

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