Top Heavy Calculation

[Guest JLecas]

A client has a multiple employer plan with 2 employers. There is common ownership between the 2 employers but not enough to create a controlled group

Owner A owns 48.5% of Company 1 and 51% of Company 2.

Owner B is the spouse of owner A and owns 24.5% of Company 2.

Owner C owns none of Company 1 and 24.5% of Company 2.

All owners receive their W2 compensation under Company 1. No compensation from Company 2. Both are S Corps.

Company 1 has about 30 employees and Company 2 has about 13.

How do I do the Top Heavy calculation? I know there is a separate calculation for each employer but who are my Key employees for each calculation? Do I include Owner A and B in both calculations? What about the fact all their compensation comes from Company 1?

[Guest JLecas]

Well, I'm glad I'm not the only one who doesn't know the answer to this.

[rcline46]

Did you test for affiliated service group?

ALthough you may have key employees in B, they have no contributions and no account balances in B, and so B cannot be a Top Heavy Plan.

Unless A is serving as a common paymaster, unless......

THere are a LOT of things to check to make sure you do not have any of a myriad of problems, such as options on the stock and .....

[Guest JLecas]

Not an ASG situation.

We had considered the fact that since non of the keys are paid thru B, then their account balances would not be attributable to B, so the Keys would all fall under A's TH calc.