cpc0506

I have 4 companies (A, B, C, D) all owned by the same 4 people (Owner 1, 2, 3, 4) in differing percentages. Owner 2 is the daughter (age 30) of Owner 1. Owner 1 owns more than 50% of each company (looking at each company separately). Is my reasoning correct, that the Owner 1 'owns' Owner 2's shares since he owns more than 50% of the shares of the company? If my reasoning is ok so far. Now, I am down to three owners to do determine if a controlled group exists. Owner 3 does not own any of Company C, so he is dropped from the testing when I am testing for a CG with all 4 companies together. There is still a greater than 80% controlling interest when I remove Onwer 3. If I pass the 80% 'controlling interest' test, and then pass the 50% 'effective interest' test, then I have a Controlled Group consisting of all 4 companies. Then am I right that only 1 coverage test needs to be performed OR do I need to look at other sub Controlled Groups that might exist and perform other coverage tests?

Company A has a DB plan and a 401(k) plan. Company B has a 401(k) plan. Company B is looking to acquire Company A. If the acquistion takes place, can the Company immediately merge just the 401(k) plans AND still use the transitional period for the DB plan?

So, is my thinking correct then, that if Company 1 owns 50% of Company 3, and the other 40% of Company 3 stock is ignored due to the ESOP, then Company 1 and 3 have a parent-subsidiary relationship, since Company 1 control of Company 3 is now 50% divided by 60% , which is greater than 80%.

Here is the scenario. Company 1 is publicly traded. Company 2 is owned 90% by Company 1. Company 3 is owned 80% by Company 2. What are the controlled groups here? I definitely see a Parent subsidiary CG with Company 1 and 2 and a Parent Subsidiary CG with Company 2 and Company 3. But what about Company 1 and 3? If Company 3 is owned 80% by company 2, and Company 2 and Company 3 are a parent subidiary, does that make Company 1 and Company 3 a CG? Or does Company 1 own just 72% of Company 3 (90% x 80%) and therefore there is no controlled group? What if Company 3 is only owned 60% by company 2? Does that change the CG situation? Please provide guidance. Thanks.

Company 1 is Publicly traded. Company 2 is owned 80% by Company 1. Company 3 is owned 50% by Company 1 , the other 40% is owned by the Company 3's ESOP. What are the Controlled Groups here? I definitely know that Company 1 and 2 are a parent subsidiary CG. But what about Company 1 and 3? Do I ignore the ESOP ownership? Can anyone provide guidance as where I can find regulations to answer this question? Thanks.

Can anyone provide guidance here? I have a client who is failing the ADP Test using 6 months data. The plan does not limit the Top Paid Group to the top 20%. If I make the change to the top 20%, the ADP Test passes. Is changing the Top Paid election considered a discretionary amendment? If so, I can amend the plan to limit the top paid group to the top 20% so long as the client adopts the amendment by 12/31/2009. Is my thinking correct?

Since both plans cover union and non-union, can't I disaggregate even further. Company 1 - union, Company 1 - non-union, Company 2 - union, Company 2 - non-union? Thanks for all your responses.

A Plan must first offer pre-tax elective contributions before it can add the designated Roth contribution option. Therefore, a client is not permitted to adopt a Roth-only 401(k) plan.

There are two employers. They are a brother-sister controlled group, but each has it own plan. The plans are identical. Both plans cover union as well as non-union employees. The owners receive compensation from both companies, but only make deferrals to one or the other, but not both. How is testing handled under these circumstances? Do the plans have to be combined to do ADP Testing?

A solo 401(k) plan had some creative accounting within the plan. Can you determine if indeed it is a prohibited transaction? facts....principal took money out of the plan to buy non-publicly traded securities as an investment within the plan. The stock certificates are titled in the name of the plan. (not so much an issue, I think) BUT, he purchased stock in the company (bank) that he works for as Vice President. The principal does not own any stock in the company (bank) himself. Is this ok?