Affiliated Service Group

[Guest saotampa]

We have a home builder that is starting a new plan. Participant D owns 50% of Company A and Participant J owns the other 50% of Company A. Participant D also owns 100% of Company B along with his wife. Company B is a training center for a real estate group. Company B provides office space, office equipment and administrative help to Company A, for which they pay Company B a monthly fee. Company B employees do not sell homes for or receive wages from Company A. I have gone through Who's the Employer and it is not a controlled group and I don't believe it is ASG but wanted some input from others as I don't have much experience with this subject.

[Jim Chad]

You might take a look at the employee leasing rules and see if any of B's employees would come under the leasing rules and need to be "counted" in A's plan.

Other than that, they look like seperate employers to me.

[austin3515]

I don't think ruling out an ASG is as simple as the prior post may have lead you to believe.

A-Org's and FSO's must be service organizations (i.e., capital cannot be a material income producing factor). Therefore, the home builder must be the B-Org. (i.e. bull-dozers, nails, wiring, plumbing, lumber are all capital), because B-Org's need not be service organizations. The B-Org is the one that must be "providing services historically performed by employees." However in your example it is the real estate training company that is providing services to the home builder, so IT must be the B-Org in an ASG. Therefore, the home builder must be the A-Org/FSO, which we already know it cannot be!!!

So no ASG. Clear as mud, right?