Ownership/eligible compensation issues

[Guest DVW]

An employer (Employer A) has three principals with the following ownership percentages: owner 1 - 40%; owner 2 - 35%; owner 3 - 25%. In addition, each one of these principals has a separate, non-affiliated company in which he owns 100% - owner 1 - 100% of Employer B; owner 2 - 100% of Employer C; owner 3 - 100% of Employer D. Employers B,C and D each have 2 - 3 employees. All three principals each make over $200,000 in their respective companies (including Employer A). Employer A has a Profit Sharing plan in which each principal is maxed out at $40,000 contribution. Each principal wants to start a new plan for each of the other employers (ER B, ER C, and ER D). Each principal knows that he cannot have a contribution allocated to him for ER's B-D. The question is, can each principal's compensation earned in Employers B,C and D, be used to increase the 25% of compensation limit for each of Employers' B,C, and D plans, even though the principal receives no allocation of contribution in each of those plans? The principals want to increase the contribution allocation to the other participants in the new plans for Employers B,C, and D. I hope this is clear. Thanks in advance.

[rcline46]

You do not appear to have a controlled group but you did not give relationship of owners. You did not say if this is an Affiliated service group which it might be.

Assuming no CG/ASG complications, the owners can have 40k in their own companies too. Just make sure they have enough hours to get an allocation.

Why do you think they cannot get 40k in A and in their respective companies?

[Guest DVW]

Thanks for the reply. The owners are all unrelated - ie: no family ties. There is no service affiliation between the companies. I was under the impression that each owner would be limited to $40k across all plans in which he participated. Are you saying this is not true? Again, thanks for your input.

[jaemmons]

DVW,

What is the principle line of business that all four companies are in? More importantly what is the line of business of company A?

[Guest DVW]

jaemmons -

Thanks for the reply. Company A is in manufacturing. After much research, we've got the situation sussed out. Thanks again for your time.