401k for US co. owned 100% by German Company--Control Group???

[Guest belfers@langgroup.com]

A German Company is looking to establish a branch in the US with 1 employee. The US branch will be a C-corp 100% owned by the German Company. The US branch wanted to establish a retirement plan for the 1 person company where the employee could contribute 10% and the employer could contribute 10%. I imagine a solo 401k could be established, but is there a "control group" situation here?

What should the US branch consider in establishing this account? What additional information might you need?

[Mike Preston]

I haven't looked this up in a while, so if someone wants to clarify, that would be fine with me. However, if the foreign parent does not have any other US based operations, I think you are ok. If it has other US based operations you would need to be concerned about aggregation rules and non-discrimination issues, just as if the ownership were US based, rather than foreign.

There are various provisions of the Internal Revenue Code that might help, though. Specifically, 414r dealing with Separate Lines of Business.

I would suggest that an ERISA attorney review the situation if there is any doubt whatsoever.

[Guest belfers@langgroup.com]

Mike, Thank you for your prompt reply!!!

Is there a website where I can view the 414r provisions?

[Mike Preston]

You can find the Code here:

http://www4.law.cornell.edu/uscode/26/414.html

You can find the regs here:

http://www.access.gpo.gov/nara/cfr/waisidx...6cfr1v5_00.html

[jpod]

1. There is a control group.

2. Non-resident aliens who receive no earned income from the employer which constitutes income from sources within the USA are excludable employees for coverage testing purposes.