Controlled Group

[DP]

I have a medical practice that is owned equally by 11 doctors. These same 11 doctors own another side business operated in conjunction with the medical practice.

The medical practice has a PS 401k plan and already maxes out the doctors' PS/401k contribution each year. The doctors are now asking if they get get a $42,000 contribution in 2005 from each of their companies.

My opinion is that they cannot do this since both businesses have the same owners. Am I correct? If not, please let me know.

[smm]

I don't think that you are going to find anyone on this board who will give you a simple yes or no answer to this question. What you need to analyze is whether the entities are a controlled group/brother and sister group within 414(b)/© and/or whether the entities are an affiliated service group within 414(m). I suggest that you review these sections of the Code along with the underlying regulations. Also, I noticed that the 2004 IRS CPE has an excellent summary of thses issues. The CPE is available on the IRS web site. Finally, you can always contact an experienced ERISA attorney for help. Good luck!