Affiliated Service Group A-Org Group?

[Guest mary99]

Company A owns 60% of Company C. Company B is a single owner LLC which owns 20% of Company C. Company C is a participating employer in Company A's 401(k) plan.

Company C provides IT consulting services focusing mainly on integration services. The owner of Company B works 100% of his time for Company C providing IT consulting services and management services.

1. Does an A-Org group relationship exist between Company B and Company C?

2. If so, is there an affiliated service group relationship between Company A and Company B?

3. If so, can Company B adopt Company A's 401(k) plan as a participating employer?

4. If so, regarding compensation for the owner of Company B, then compensation for testing and contribution purposes would be taken from K-1?

[ETA Consulting LLC]

1) Don't know. It is definitely a B-ORG. Not sure if IT consulting would qualify as Professional Engineering. However, it is an Affiliated Service Group Between B and C where C is the First Service Organization and B is the B-ORG.

2) I'll assume that C is providing it's IT Consulting Services to A. I'm not sure if TI Consulting would qualify as professional engineering services, so that may take the A-ORG analysis way. If we were to do a B-ORG analysis between A and C, we know that A would be the FSO (depending on whether it is actually a service organization) and C would be a B-ORG only to the extent C is owned (or deemed to be owned) by one or more of A's HCEs in an amount of at least 10%.

I don't believe there are enough details to perform a complete analysis.

Details are important.

Good Luck!

[Guest mary99]

Company C is an S corp and provides IT and consulting services to other businesses. It does not exist to provide services solely to Company A.

Company A is equally owned (each 33%) by 3 individuals.

Company B, as I mentioned is a single member LLC.

What other details are needed that may help the analysis? Thank you!

[ETA Consulting LLC]

Anytime I perform an analysis, I would want all percentages to total 100% (For Company C, you only identified 80%). I would also want relationships defined between the owners (are any of them related).

We know that C is deemed to be owned by at least 10% by HCEs in Company A.

We don't know what percentage of C's revenue is received from services to A (is it 10% or more).

Also, is A a service organization?