Placing of Controlled Group HCEs on subsidiaries' payrolls to satisfy

[Guest McElroy]

A controlled group will exist later this year when six holding companies are merged. Each separate bank currently maintains a 10% money purchase plan and a discretionary profit sharing plan (ranging from 0% to 15%, with an average contribution of 7.5%). Certain HCEs will continue to receive compensation from more than one but less than all banks. New single holding company is trying to determine what to do with plans.

Option 1 would allow the plans to be separately maintained. This would require that each HCE receive compensation from each bank. That would allow each plan to satisfy 410(b)on a stand alone basis. 415 limits would not be exceeded. Instead of an HCE getting $150,000 from bank 1, he might receive $100,000 from bank 1 and $10,000 from each other bank.

Option 2 is to merge the plans. The employer would be required to run the ABT under 410(B). Difficult to predict.

Option 3 is to try to satisfy QSLOB requirements. Difficult to show separate management and 50 employee requirement.

Am I missing anything? Thanks for your thoughts.