Conrolled Group - Excluded MemberPlan design – 12/31 PYE, DF & MT (no hours or EOY requirements), 21 & l YOS, enter semiannually.

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Plan design – 12/31 PYE, DF & MT (no hours or EOY requirements), 21 & l YOS, enter semiannually.

Our client forgot to tell us about a new company they formed in July of 2004. The ownership percents in each company indicate they would be considered a controlled group.

My understanding of the transition rule in the ERISA outline book is that the rules cannot be applied since the company in question is a newly formed company not the acquisition of an already existing business.

I have not received any information regarding the number of participants in the new company. Since the transition rules do not apply, I will have to try testing out the eligible participants of the excluded controlled group for calendar year 2005 (non of the excluded company’s employees would have been eligible in 2004).

Now in 2006 they want to start allowing the employees in the company that was excluded to enter the plan as of October 1st. How do I test coverage?

As of December 31, 2006, all eligible participants of the controlled group will be benefiting in the plan. But for three quarters of the year one company was not allow to participate in the plan.

Do I perform a coverage testi as of September 31, 2006 and then again at December 31, 2006.

Any help would be greatly appreciated.