differing match for various companies under common control

[Guest EBGEEK]

Three companies are under common ownership. Two are adopting employers under the largest employer's plan.

The largest of the companies did not have a good year. If it is possible, what are the issues if they want to make a matching contribution only for employees of the two smaller companies?

[Mike Preston]

Two issues:

1) The plan must allow the match to be made only for the employees of the adopting employers, rather than for the plan as a whole.

2) those eligible for the match must, on their own, be a 410(B) group.

If these are three separate entities, each with their own management structure, you will probably not have too much difficulty establishing the aggregation of the smaller companies as a 410(B) group. If, on the other hand, the smaller companies have a higher concentration of HCE's than the large company, then it may be more problematic.