Controlled Groups

[Guest Ted Kowalchuk, CFP, CFS,]

I have a client that owns an aviation company that sponsors a safe harbor 401(k) plan. He's 100% owner. Earlier this year, he acquired an 82% interest in another aviation company that does not sponsor a 401(k) plan. I believe he has a controlled group situation. Am I correct?

[Dan]

Based on what you state here, the answer appears to be yes. Since he owns 100% of the plan sponsor and his ownership of the acquired company exceeds 80%, a controlled group should exist.

[Guest Pensions in Paradise]

Note there is a 2-year transition rule for acquisitions. The plan will be deemed to pass coverage up through the last day of the plan year following the plan year in which the other company was acquired. IRC 410(b)(6)( C)