Compensation from related employers

[MLML]

Hello all,

The 100% owner of company A owns 100% of company B (controlled group). He earns 100K from company A, and 80K from company B. There are no non-owner employees in company B.

Company A maintains a 401(k) plan. Company B is not a participating employer.

For the ADP/ACP testing purpose for the plan maintained by company A, what is the compensation do I use for the owner? Is it 180K or 100K?

The Plan -

- Corbel volume submitter

- Document defines 414(s) compensation to be used for non-discrimination testing

- The definition of compensation in the document is W-2, which I use for the allocation purpose (for profit sharing contribution)

My conclusion was to use the 180K as the definition of 414(s) compensation from my research was to include all the compensation from the related employers. But someone asked me, if the coverage is not an issue, and therefore you don't aggregate for the coverage, and therefore you don't aggregate them for non-discrimination testing, then why combine both compensation?

So, now I am questioning the relationship between the aggregation of coverage and non-discrimination testing, and if that affects my original question of the compensation that has to be used for the ADP testing. I am thinking whether you aggregate for the coverage or not, the 414(s) compensation that has to be used for the ADP/ACP testing, has to include the compensation from the related employer.

Would you please help?

Thank you.

ML

[Guest On Hiatus]

Is there a plan covering the second employer, and does your owner participate in that plan?

[MLML]

Is there a plan covering the second employer, and does your owner participate in that plan?

There is no plan for a company B.