Plan aggregation for top heavy

[Guest jkrad]

I have an individual who is 100% owner of co. A and 50% owner of co. B. He doesn't participate or receive compensation from co. A but draws compensation and participates in co. B's 401(K) plan.

Co. A's plan is not top heavy but co B's plan is top heavy. My question is can these plans be aggregated to satisfy top heavy for plan B. Also would aggregating the plans have to be done on a yearly basis?

The two plans in question are first year plans (2002) and it is my understanding that December 31, 2002 is the determination date for top heavy issues.

[R. Butler]

From the limited facts you have given I don't see that Company A & Company B are related employers.

Individual owns 50% of Company B. Is any part of the 50% he does not directly own attributed to him? Is this an affiliated service group situation?

[Guest jkrad]

His wife own the other 50% of co. B not attributed to him. This is not a affiliated service group.

[R. Butler]

If individual's spouse owns the other 50% of Company, then her 50% is attributed to him under §1563(e)(5).

Does any key employee participate in Co. A's Plan? Are the plans aggregated to pass 410(B) or 401(a)(4) nondiscrimination tests? If the answer to either question is yes then the plans must be aggregated.

If there isn't required aggregation you still can permissively aggregate if the plans can be aggregated without failing 410(B) or 401(a)(4).

See 416(g)(2)(A).