controlled group question

[Guest Moira]

I have a plan I work with that is currently operating under a prototype plan document. Recently, we reviewed the ownership structure and discovered that we may be improperly operating under that prototype document as it is not a controlled group, but is instead a multiple employer plan.

Company A is 100% owned by Bob.

Company B is 35.6% owned by Bob, 35.6% owned by Chris, 11.9% owned by John, 11.9% owned by Tom, and 5% owned by Scott.

Company B is almost a subsidiary of Company A - providing computer networking services to an insurance company (Company A) as well as many other local customers. Chris and John are also employees of Company A. This could be an Affiliated Service Group? Don't know if that even has ramifications to the issue at hand.

Anyhow, the owners thought they were within the controlled group rules. I don't see how, unless they can be considered an affiliated service group. They have been making matching contributions throughout the years, and even recently were converted to a safe harbor 401k plan. Both Company A's employees and Company B's employees have been contributing and receiving employer contributions. If this plan is not a controlled group, what must we do to fix this?

Thanks.

[Ron Snyder]

This certainly smells like an Affiliated Service Group. If so, it would still be a single-employer plan and fit under most prototypes. Get an opinion on the ASG issue!