Controlled Group 401(k)

[Guest W J Parks]

I have an LLC owned by 4 individuals one of whom is less than a 5% S/H. 3 of the S/Hs (including the less than 5% S/H) do not draw a salary but are paid consulting fees (1099).

Effective 1/1/01 the LLC established a 401(k) to cover one more than 5% S/H who draws a salary and 8 other EEs.

The 3 other S/Hs have set up SEPs and plan to make 2001 contributions based, in part, on their consulting income from the LLC (they also have other 1099 income from other sources).

Am I correct in saying the 4 plans are mandatorily aggregated for 2001 although 3 of the plans are not 401 plans?

How do we handle the ADP and ACP testing since the 3 SEPS are not SARSEPs or SIMPLEs?

It appears we have a problem with only the 3 S/Hs receiving the maximum non matching contribution and everyone else receiving only a very modest match.