Jump to content

Separate Plans Maintained by Members of a Controlled Group


Christopher Wilson

Recommended Posts

Hello everyone - I'm double-checking my understanding of the nondiscrimination testing rules with respect to separate plans maintained by members of a controlled group. Each spouse has a separate business and sponsors a plan. Husband receives compensation from his wife's business. When performing nondiscrimination testing for the wife's plan , I believe you only use the compensation paid to the husband from the wife's business, correct? In other words, you don't aggregate compensation paid by two different business even though those businesses form a controlled group. Thank you for your comments. 

Link to comment
Share on other sites

1 hour ago, Christopher Wilson said:

Hello everyone - I'm double-checking my understanding of the nondiscrimination testing rules with respect to separate plans maintained by members of a controlled group. Each spouse has a separate business and sponsors a plan. Husband receives compensation from his wife's business. When performing nondiscrimination testing for the wife's plan , I believe you only use the compensation paid to the husband from the wife's business, correct? In other words, you don't aggregate compensation paid by two different business even though those businesses form a controlled group. Thank you for your comments. 

Um... you treat the two plans as ONE; test it as one plan (think of it as two divisions of a single company if that helps).  So you would aggregate the compensation and everything else.  

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

Link to comment
Share on other sites

Members of a controlled group are treated as a single employer for purposes of 415, that is, for determining compensation.

However, check your plan documents to see if any compensation is excluded, for example compensation paid by other members of a controlled group which have not adopted the plan.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...