obvious controlled group?

[gregburst]

Assume Chris owns 100% of company A, a C-corp which has 50 employees.

Several people/resources have told me that if Chris sets up company B, a C-Corp "marketing" company with Chris as the only employee, then B can sponsor a qualified plan without having to cover any of the employees of A.

This goes against everything I've ever learned or been taught, but I'm willing to be corrected.

Is such a set up really allowed by IRS?

If so, can you please provide a cite?

Thanks,

[ETA Consulting LLC]

This goes against everything I've ever learned or been taught, but I'm willing to be corrected.

Me Too!

Is such a set up really allowed by IRS?

Yes, in that any company can set up and maintain a qualified plan. Part of the qualification rules is that the plan must satisfy the non-discrimination requirements each year. This type of setup will, obviously, fail since you're benefiting only one HCE and zero NHCEs.

If so, can you please provide a cite?

Thanks,

410(b), 401(a)(4), 414(b), 1563 :angry:

Good Luck!

[masteff]

I wonder if the nuiance about it being a "marketing" company is an attempt at a QSLOB. (Said w/out going back to look up the requirements for a QSLOB.)

[ETA Consulting LLC]

I wonder if the nuiance about it being a "marketing" company is an attempt at a QSLOB. (Said w/out going back to look up the requirements for a QSLOB.)

The initial requirement for QSLOB is at least 50 employees in each.

Good Luck!

[K2retire]

I wonder if the nuiance about it being a "marketing" company is an attempt at a QSLOB. (Said w/out going back to look up the requirements for a QSLOB.)

The initial requirement for QSLOB is at least 50 employees in each.

Good Luck!

But many advisers are unaware of that little detail!

[Mike Preston]

gregburst, you need to ditch those people and those resources.