Controlled Group Deduction

[Gary]

A husband and wife own two small companies.

Both companies sponsor the same pension plan.

Regarding allocation under 404.

My understanding from 414(b) is that each employer is treated as a separate employer re: allocation of deduction.

Any other views or does that cover it?

Thanks.

[Gary]

Looking at 414(b) again it says that the deduction is allocated to each employer in accordance with regulations prescribed by the Secretary.

Are there regs that specify how it should be allocated?

Are two entities in the same controlled group considered "multiple employers" for purposes of 412 and 404?

If the two entities are considered one employer period; than what is a reasonable and prudent way to allocate deductions? The separate employer method seems to be conservative and perhaps a safe harbor.

Thanks.

[David MacLennan]

As far as I know there are no regs or other guidance on how to allocate the deduction. More importantly, this is not your problem. Tell the client his CPA needs to advise him on this. The CPA should choose a "reasonable" method (perhaps with input from you the actuary) and stick to it year after year.