How is compensation determined if owner owns different types of entities

[Guest benefitsgirl]

Hi

Have an owner who owns several entities that are part of a controlled group, which are all participating employers. He receives compensation from these entites in various forms, such as Schedule C income, K-1( Partnership), W-2 (S-Corp). He contributes 401(k) deferrals to the plan from his W-2 compensation. For the 2009 plan year the compensation calculated from his k-1, and Schedule C resulted in a loss that was more than his W-2 Compensation. Am I correct that since all compensation combined was a loss, that he is not allowed to have 401(k) deferrals, even though he contributed based upon his W-2 compensation?

Also, 1 entity is no longer controlled this year, so we would be required to test this entity separately - since not part of the controlled group. Eventhough not part of the controlled group, I would still be required to use all compensation earned in testing - correct?

Thanks

[PensionPro]

You have a described a rather complex situation. Here are a few guidelines: various types of compensation from the same trade or business are determined in the aggregate; compensation from different trades or businesses are determined separately, then aggregated.

Why would you use compensation from unrelated employers in your testing?