MHANSON

Thank-you Mr. Bailey, I appreciate your response. Sounds like insurance through the s-corp could be an option - for both the employee and myself. I did look into an ICHRA arrangement and am still considering that strategy as well. However, we should be able to find a small group plan that is less expensive and has better coverage than what we are able to purchase individually so I am leaning in that direction. If we do go the group plan route I can work something out with my associate who is on Medicare to accommodate him not benefiting from the coverage. Thanks again, Matt

Thank-you for the responses and sorry it took some time for me to respond. My wife and I do have children under 21 years of age so I guess that makes her s-corp and my sole-prop a controlled group? I think it's bizarre that having a child under 21 makes a difference, but there's a lot of stuff the government does that I don't get so I digress. The sole purpose of the new s-corp is to provide administrative support to my sole-prop and my associates separate sole-prop, so I am thinking that would be considered a service organization. And if both of the above are accurate I suppose that all four of the businesses are going to be considered a controlled group. In that case I suppose we should probably just integrate all of our retirement plans into the 401K plan at my wife's business. Am I on base here or not really? Thank-you, Matt

Hi David, My apologies if this is considered a duplicate post. Although the same business situation is involved in each post, in the other post I was asking about retirement plans and in this one it was about health plans. I just thought it would be appropriate to ask about the health insurance implications here in the health insurance topic and the retirement plan implications in the retirement plans topic. Matt

I just posted a very similar question in the 401K section of this forum. As a matter of fact, I basically just copied the initial scenario description from there, but there are some differences in the questions I have. Hoping someone can help me determine if I have a controlled group issue between multiple businesses my wife and I fully or partially own. Businesses and ownership is as follows: My wife owns 100% of a S-corporation that does not offer health insurance to her employees since most employees have coverage through their spouse. We feel it would be redundant to provide additional coverage and instead utilize the funds she would be spending on health insurance to provide additional bonuses and extra paid vacation time to the employees. This business and health plan have been active for many years. I am a sole-proprietor and have taken a self-employed health insurance deduction for several years. We have been purchasing our insurance directly through the exchange. I have an associate that also operates his own sole-proprietorship. That is his only business that I'm aware he owns and he is now on Medicare but I think his wife is still covered via a plan through the state (retired teacher). I am forming an S-corporation with the associate and we each will own 50% to start. The s-corp was formed to pay joint administrative and office expenses and will have one employee. We will still operate our own sole-props and will only reimburse the S-corp for our pro-rata share of expenses. The associate and I will not be employees of the s-corp, but will be officers and directors. I would like to offer health insurance to the employee, but also want to look at options to obtain health insurance for myself and family through the s-corp. Considering the above, my questions are: First, are there any issues with me taking the self-employed health insurance deduction through my sole-prop even though my wife doesn't offer any health insurance to her employees? While I believe I may technically be in a controlled group with my wife's business I am hoping that it doesn't impact my ability to take the SE health insurance deduction for our privately purchased insurance. Second, for health insurance benefit purposes, would the new s-corp being formed be considered a controlled group with my sole-prop and/or my wife's s-corp? I'm thinking this isn't the case since I am not an 80%+ owner of the new corp. Assuming it's not the case I am under the impression that there should not be any issues providing health insurance benefits to the employee even though my wife doesn't offer health insurance to her employees. Finally, if we are OK so far, would I be able to acquire health insurance for myself and my family by nature of being an officer of the s-corp without impacting my wife's business? In a perfect scenario we will obtain a small group policy through the s-corp that covers employees and officers. My partner would be exempted as he is on Medicare - though possibly he would be eligible to cover his wife through the group policy until she becomes eligible for Medicare. In any case, I believe this all hinges on the new corporation not being in a controlled group. IF it is part of a controlled group including my business and my wife's business I am hoping we can just reimburse the employee for individually obtained insurance through the health exchange and I can continue to purchase my own insurance and write if off via the SE health insurance deduction through my sole-prop. Any help or insight on the above would be very appreciated. Just trying to cover my bases so we don't get a nasty surprise down the road... Thank-you! Matt

Just realized there is a specific Multi-Employer Plan section where this probably should have been posted. However, since there doesn't seem to be near as much action in that section hoping it's OK to leave it here... Thanks!

Hoping someone can help me determine if I have a controlled group issue between multiple businesses my wife and I fully or partially own. Businesses and ownership is as follows: My wife owns 100% of a S-corporation that sponsors a 401K plan with safe harbor provisions in place. This business and plan have been active for many years. I am a sole-proprietor and have been funding an Solo(K) for several years - but my total annual contributions have always been below the employee-only contribution limit. I have an associate that also operates his own sole-proprietorship. That is his only business that I'm aware he owns and I'm not certain what he's been doing in terms of retirement plans. I am forming an S-corporation with the associate and each will own 50% to start. The s-corp will pay joint administrative and office expenses and will have one employee. We will still own and operate our own sole-props and will only reimburse the S-corp for our pro-rata share of expenses. My associate and I will not be employees of the s-corp, but will be officers and directors. We would like to offer a retirement plan to the employee - but ideally a SIMPLE or SEP plan. Considering the above, my questions are: Is my sole-prop technically a controlled group with my wife's corporation? Although I think answer to that question is probably yes, I am hoping that I'm OK since I have not been contributing over what the maximum of would have been allowed had I been a participant in her safe harbor plan. However, going forward should I integrate my plan into her plan or am I OK keeping it separate? FWIW, I am utilizing a brokerage account for my plan while there is no brokerage account option in her plan so I hope I can continue to operate in that same manner. Also, if I am a controlled group I assume I cannot (or at least should not) try to operate a different type of retirement plan such as a SEP for my sole-prop? Will the newly formed s-corporation be considered a controlled group with my sole-prop? And taking it a step further, if that is the case would it technically be a controlled group under my wife's corporation as well (assuming my sole-prop is a controlled group under her s-corporation)? If those are both YES I assume I would have to offer the employee coverage under the same 401K plan and likely change my Solo(K) to a regular 401K. However, I am hoping that this isn't the case since I only own 50% of the new corporation. As mentioned above, we would like cover the employee via a SIMPLE or SEP plan. Will the new s-corporation and my partners sole-prop be considered a controlled group? If that is the case I would think that he could participate in the 401K plan if he desired. However, he probably should not operate a different retirement plan for himself. Once again, I am thinking that because he only owns 50% of the corporation that he is not in a controlled group. So, my hope is that the only controlled group in the above is my sole-prop and my wife's s-corp and that I will be OK since I would have been operating within the parameters of her plan had I been participating in it. However, any insight into any of the above would be greatly appreciated. Thank-you! Matt