Controlled group with regard to SIMPLE Plans

[k man]

Someone help me settle a bet.

Jim owns 100% of company A

Jim owns 51% of several other companies

Jim wants to set up a SIMPLE plan for Company A. Is there a control group situation with the other companies? The companies have nothing to do with each other and there is no other common ownership.

[Guest Mr. X]

Without the 80% common ownership there is no controlled group here.

[k man]

thats what i thought but had to get comfirmation. does the fact that it is a SIMPLE plan change anything?

[KJohnson]

I agree, but watch out for family attribution, stock options etc. I believe that you would have family attribution of even children over the age of 21 in this situation.

[Guest Mr. X]

The fact that it is a SIMPLE plan does not change anything that I know of. Any ownership by children would be attributed (1563 attribution) in this case because the parent owns more than 50% of the entities.

[Guest rhp]

On a slightly different issue, the owner would only be entitled to one 415 maximum [sect 415h] since he owns more than 50% of both.

[k man]

I thought 415 went away in 1999.

[Guest]

415(e) went away. Not allpicable here. The more than 50% test for 415 purposes applies only to parent-subsidiary relationships. If Jim, and not company A, owns the 51% of the other companies, he has multiple 415 limits.

[Guest]

Careful though. 415 dosen't apply to SIMPLE plans.

[Guest rhp]

I agree 415 does not apply to SIMPLE--408p plans. But the control group rules do apply. Notice 98-4 has questions addressing this at B-5 and C-1.