individual owns 2 unrelated companies

[Guest nipa]

An individual owns and is the only employee of 2 different unrealted companies. The financial adviser has informed the individual that he/she can have two plans and contribute $20,000 to each plan.(there is no salary deferral). I am having a brain cramp and don't believe this is possible. Could someone confirm one way or the other. Thanks

[R. Butler]

I'm not sure what you mean by unrelated. If he is sole owner of 2 companies, the 2 companies are a controlled goup.

Each company could sponsor a profit sharing plan. Depending on compensation the owner/employee could get a $20,000 allocation under each plan. If its a controlled group situation, it may be better to establish 1 SEP.

[Guest nipa]

in my original post I was thinking incorrectly of the 40,000 annual addition dollar limit and dividing it, but what I really was thinking how about $40,000 in each plan

[Blinky the 3-eyed Fish]

He can't get $40,000 in each plan. It is a controlled group, so it's just like it's one employer.

[Earl]

Isn't there a reg that says even if it is not a control group the 80% threshold is reduced to 50% for the application of the 415 limit?

I remember it and looked for 5 mins but can't find it...

[Harwood]

§ 415 Limitations on benefits and contributions under qualified plans.

(h) 50 percent control.

For purposes of applying subsections (b) and © of section 414 to this section, the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in section 1563(a)(1).