SIMPLE IRA Plan. Unsure if controlled group poses a problem

[Guest Dennis Hennessy]

An Employer wants to establish a SIMPLE IRA. The employer is owned by a Father and his six children equally, and these seven people are the only employees. The Father is also 100% shareholder of three other businesses. These three companies do not have and have never had any qualified plan. Are there any controlled group issues that would either prevent the first mentioned company from establishing a SIMPLE IRA or requiring a plan for the Father's other businesses?

[Gary Lesser]

Under Code Section 1563(e)(6)(A), the father is deemed to own the stock of his children under the age of 21. Thus, employees of the other businesses must be treated as if employed by a single employer.

[Guest Dennis Hennessy]

Gary,

Thank you for your response. I should have made it clear that the six children are all over the age of 21.

[Gary Lesser]

In that case, then the individual would only be attrubuted with the stock of adult children (age 21+) if he/she owned more than 50%. [iRC 1563(e)(6)(B)]