Controlled Group

[chris]

Client owns 100% of the shares in Corp A and owns 50% of the shares in Corp B. If Corp A maintained a Profit Sharing Plan, the controlled group rules would not require the e/ee's of Corp B to be covered by the Corp A plan because client does not own more than 50% of Corp B. Is that a fair assessment of the controlled group issue? The other shareholders of Corp B are all individuals unrelated to client.

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[EGB]

Chris - a few things to note. First, even if companies are in a controlled group, all of their employees do not have to be covered under one another's plans unless the plans are on standardized prototype documents. If not on standardized prototype document(s), companies can be excluded. However, if two or more companies within a controlled group (or ASG) maintain separate plans, those plans will have to be aggregated for certain testing purposes.

Your situation does not appear to be a controlled group, such that Company B's employees cannot participate in Company A's plan without creating a multiple employer plan.