Plan Sponsored by More than One Company

[Gary]

We have an individual who wholly owns two corporations.

The two corporations co sponsor a pension plan.

The owner is the only person who is an employee of both corporations.

Say the owner earns 50,000 in one corporation (the one in which he is the only employee) and $25,000 in the other, which has all the employees.

The pension formula will use the entire 75k when computing the pension benefit and for non discrimination testing.

Let's assume we are dealing with the 2007 plan year.

Is there a required way in which the minimum funding and/or maximum deduction must be allocated?

That is, would the funding for the corp with the owner and his 50k be based on just the 50k and the funding for the other corp be based on the additional 25k of owner comp and the comp and benefits of the employees?

Or can the total deduction be allocated in other ways, if desired?

The only statutory knowledge I have observed is in 413©(4)(A), where it indicates that each employer shall be treated as separately maintaining the plan.

Curious to hear other views and related statutory or regulatory cites.

Thank you.

[Blinky the 3-eyed Fish]

You have a controlled group situation not a multiple employer plan situation so 413 doesnt apply. This question has been asked before. There is not clear guidance that I am aware of. Some will argue you must follow a reasonable split of the deduction. Others will argue that being a related employer means the deduction can be taken however they like.

[Gary]

I had thought that the term more than one employer meant that more than one company (where each company was an employer) constituted more than one employer.

My understanding of the previous response is that more than one company within the same controlled group constitutes only one employer.

I will check into those definitions and if there is a specific cite to reference that you know of that would be appreciated.

Thanks.