Controlled Group Question

[RayJJohnsonJr]

Spouse A is a physician, is in private practice which has a safe harbor 401(k). Spouse B is a physician, is in private practice, and has a cash balance plan. Spouse A and B jointly own a third business, 50/50, a healthclub, which is covered by Spouse A's safe harbor 401(k). Is there a controlled group issue with regard to the health club? Is it required to have a cah balance plan equal to Spouse B's plan?

[Guest Sieve]

Since A & B are married, then the health club is a member of a controlled group with the husband's practice and also iks a member of a controlled group with the wife's practice. But, the 2 practices are not members of the same controlled group if neither is involved in the other's practice (bd., employee, s/h, etc.). So, the health club's plan must also be considered with spouse B's plan when testing is done.

Beware, too, that if they have a minor child, the IRS' position is that the practices of A & B are members of a controlled group (which would include the health club, too).

[RayJJohnsonJr]

Since A & B are married, then the health club is a member of a controlled group with the husband's practice and also iks a member of a controlled group with the wife's practice. But, the 2 practices are not members of the same controlled group if neither is involved in the other's practice (bd., employee, s/h, etc.). So, the health club's plan must also be considered with spouse B's plan when testing is done.

Beware, too, that if they have a minor child, the IRS' position is that the practices of A & B are members of a controlled group (which would include the health club, too).

Thank you, Larry,

Rene