Aggregation under Section 415(k)(4)

[billfgrady]

In an earlier post I concluded that aggregation would not occur in the following setting (repeated here for ease of reference):

Two employees are each exactly fifty percent owners of a professional service corporation, which maintains a 401(k) profit sharing plan. Each employee will receive a contribution equal to the 415© maximum for 2002, $40,000. None of this amount is attributable to a 401(k) elective deferral. Both individuals are also highly-compensated employees of a non-profit organization, which provides a voluntary 403(B) Retirement Plan for the benefit of its employees. Under this particular plan, employees may elect to defer all or some portion of a yearly bonus of $16,000 into the 403(B) Plan. Neither employee has an ownership interest in the not-for-profit.

My earlier reasoning was as follows. Treas. Reg. Section 1.415-8(d)(2), which provides that if the employee owns or controls more than 50% of another business that maintains another plan, the contributions to the Section 403(B) Plan must be "aggregated" with the contributions to the outside plan or the 403(B) employer's other plans. Given that neither employee owns more than 50% of the professional corporation, I concluded that aggregation under Section 415 will not be an issue under these circumstances or otherwise.

I am now uncertain as to whether or not 1.415-8 has been superceded. I have been alerted to the existence of Section 415(k)(4), which was added by EGTRRA. 415(k)(4) appears to reiterate some but not all of the guidance provided by Treas. Reg. Section 1.415-8(d)(2), which described special rules under which the employer is deemed to maintain the annuity contract. So, I'm not sure the underlying rule has changed much.

Reading Section 415(k)(4) and notwithstanding Treas. Reg. Section 1.415-8(d), I still maintain that, unless an employee has "more than 50%" control of the for- profit employer, the 403(B) plan will not be treated as being owned by the for-profit employer. Thus, no aggregation. Correct?