Controlled Group Question

[Lori Foresz]

Doctor is 100% owner of medical corp with one employee.

Doctor's wife has a trade or business that operates as a sole proprietor that established a DB plan and covers the doctors (husband) as an EE.

My reading seems to imply that the group is a common controll group and that the spousal exception rule does not apply (since the spouse is an EE).

So, both businesses would be 100% owned by the the doctor (he is deemed to own 100% of his wife's sole prop) and failing to cover the EE of the doctor's corp would be a problem.

Does anyone see this analysis as wrong?

If so, please tell.

Thanks

[Appleby]

1.414©-4(b)(5) (ii) (B) seems to support your analysis…it states “Such individual is not a member of the board of directors, a fiduciary, or an employee of such organization and does not participate in the management of such organization at any time during such taxable year;”

[Lori Foresz]

Thanks Appleby. It's amazing how many advisors overlook controlled group rules when setting up plans for clients.

I appreciate your response.

Thanks!