Controlled Groups

[Guest lallain]

Owner A......Owns 80% of Company X other 20% owned by his wife

Owner A...owns 50% of Company Y and 50% owned by Owner B

Company X has 401(k) Plan...Do they have to include Company Y and can they exclude this company since Owner A doesn't have 80% ownership in this company?

[Archimage]

It doesn't look like it is part of the controlled group but it is possible it might be an affiliated service group. What is the capacity of company X to company Y?

[Guest cosmo]

At first glance, I would say they are not a controlled group and not enough info for an ASG determination. However, stock attribution under IRC 1563 may come into play if they have children under age 21. In addition, I know this may be a little more than you asked but you may also have to look at the restrictions on the stock and whether or not the disposition of the stock favors Owner A or any children he/she may have under 21 (i.e.-right of first refusal).

Just food for thought.