Controlled group 401(k) first plan year as large plan

[kwalified]

Company A, B, C are all owned by one individual. Companies A and B are in the same state. C is in another. They more or less all have the same principal business activity. It has been established that they are in fact a controlled group.

Companies A and B really are not profitable, while company C shows good numbers. The current 401(k) covers all 3 companies and just went to "large" status.

The owner would like to reward the employees of Company C since they provide the greatest earnings. Their new CPA wanted to create 3 separate plans but I don't think the regs or QSLOB would allow that.

Would a non-qualified deferred comp plan be the only option for C?

[Lou S.]

Cross test the contribution. Have groups A, B & C.

[BG5150]

Would component plans work? Have some folks in C "team up" with those in A and the rest of C go with those in B.

[Mark Whitelaw]

You certainly want to maximize qualified options.

Employer sponsored NQDC - 409A - presents is a short-term solution with long-term problems for both the HCE's and employer.

There are lifelong HCE owned / priced alternatives today - not 409A - where the employer role is facilitator that provide better value and flexibility than NQDC for both the HCE's and employer.

[chc93]

I don't know much about QSLOB's or its rules... but we have a Company A that owns Company B, and Company A was split into 2 plans, and Company B was also split into 2 plans, so 4 plans total... all to keep each plan under 100 participants. ERISA attorney set this all up.

[kwalified]

thank you for your replies