Top Heavy Testing with Control Groups

[Bruddah Kimo]

OK - I've read through the many Top Heavy/Control Group posts and my head is spinning

I'm hoping if I lay out a scenario I'm facing, someone can provide an answer.

Company A has 4 owners (each 25%) that sponsors a calendar year 401k plan.

In 2007 Company B was formed in which Company A has 85% ownership. Company B consists of 2 former EE's of Company A. One is a 15% owner, the other is a worker bee. 15% Owner of Company B does not have ownership in Company A.

Company B became an adopting employer of the Company A 401k plan in 2007.

Both Company B employee's are eligible and participate in the 401k Plan.

Only 401k deferrals were made to the Plan in 2007.

My question regards Top Heavy determination for 2008.

Do I test each company separately for Top Heavy (whereby Company A is not Top Heavy), or do I need to aggregate the testing where the 15% Company B owner is considered a Key EE which causes the Plan to be Top Heavy?

[Blinky the 3-eyed Fish]

Since Company A has an 85% ownership of Company B, you clearly have a parent-subsidiary controlled group. Therefore, you don't have a multiple employer plan and just have one big TH test.

[Bruddah Kimo]

Thanks Blinky - I was told otherwise by one of our Senior folks here. I've been reading through Sal today trying to find my 'error' but came up empty. I feel a lot more confident now that the famous Blinky agrees with my interpretation. Mahalo!!!!