Common Control

[Guest tintree73]

Owner owns 100% of new entity X with four NHCEs (entity X is owned directly by Owner).

Owner also owns 80% of Entity C (no employees) and Entity C owns 90% of entity Z.

Entity Z has a 401(k) plan that Owner wants us (we are Entity Z) to amend to allow employees of new entity X to participate.

This clearly seems to be a controlled group situation - is it too good to be true that it is this easy? Please let me know if you think I am wayyyyy off base here.

[R. Butler]

Based on the info. you've given your analysis appears correct.

[Alf]

Assuming Owner is an individual and owns X and C in her individual capacity AND that there are no "interesting details" (options, reciprocal repurchase rights, etc), I agree.

[R. Butler]

Assuming Owner is an individual and owns X and C in her individual capacity AND that there are no "interesting details" (options, reciprocal repurchase rights, etc), I agree.

Why do we have to assume the owner is an individual? For the sake of arguement lets assume Owner is a Corp.

Corp. Owner owns 100% of X & 80% of C. C owns 90% of Z. Seems to me you still have a parent subsidiary group.

Also I don't really want to think about this too much right now, but I don't immediately see how options, etc. take you out of controlled group status.

[Guest Pensions in Paradise]

Ok, I'm probably wrong, but I don't see how X and Z are a controlled group. I agree that X and C are a controlled group, and that C and Z are a controlled group. But the Owner's ownership percentage of Z is only 72% (80% x 90%).

[Guest mrilao]

I thought it was a pass through percentage as opposed to the calculation method (discussing ownership from C to Z of 71%)

Is that analysis described anywhere-I'm a beginner on this side of it and was confused a bit by pensions in paradise's response. Thanks!

[R. Butler]

Ok, I'm probably wrong, but I don't see how X and Z are a controlled group.  I agree that X and C are a controlled group, and that C and Z are a controlled group.  But the Owner's ownership percentage of Z is only 72% (80% x 90%).

I looked it initially as a combo group.

X & C are a brother/sister group

C & Z are a parent/subsidiary group.

Under the combo group rules if a parent org. in a parent/subsidiary group is also part of a brother/sister group, all orgs are part of 1 group.