controlled group, separate eligibility

[Guest sabecker]

I have a client with two companies that are a controlled group. They would like the employees to qualify separately for participation for each co. So if an individual works 1000 hrs for Co. A, they can participate on comp earned with A. But if the same individual also works 400 hours with Co. B, comp earned with B would not be eligible for deferral b/c individual does not meet eligibility with B. any issues with that arrangement or does a controlled group rule override this type of eligibility arrangement?

[ETA Consulting LLC]

No, as long as each plan passes 410(b) on its own merit, there shouldn't be a problem.

Good Luck!

[PensionPro]

Are we talking about one plan or two plans?

[12AX7]

This may be jumping ahead a little, but if it is two plans and there are coverage issues, be mindful that the plans must have the same plan year to be aggregated for coverage purposes.

[PensionPro]

An employee's service with all controlled group members are aggregated to determine eligibility. If this individual worked 1000 hrs for Co A, this service must be recognized in determining eligibility for Co B as well.