EBDI Posted March 28, 2014 Posted March 28, 2014 I believe these two LLC's are a control group. Owner A and Owner B each own 50% of LLC #1. Owner A owns 26% of LLC #2 and Owner B also owns 26% of LLC #2. Owner C owns 49% of LLC #2. None of the owners are related. There are 5 or fewer individuals who own 80% or more of LLC #1 and 5 or fewer who own more than 50% of LLC #2. This would be a brother sister control group, correct? LLC #1 has a safe harbor non elective 401k plan. LLC #2 does not have a retirement plan. LLC #2 has one employee. I have read that a safe harbor plan and a non safe harbor plan cannot be aggregated for testing. How about a safe harbor plan and no retirement plan situation? Do I have to include the employee of LLC #2 if she met eligibility in the 410B coverage testing?
Lou S. Posted March 28, 2014 Posted March 28, 2014 No controlled group. C owns 0% of LLC 1 and this does not have any common ownership and is ignored in the analysis of CG. So only look at A & B and you are left with 52% common ownership and 52% identical ownership so you fail the 80% test. Though nit picking point A/B/C own 101% of LLC#2 in your example.
12AX7 Posted March 30, 2014 Posted March 30, 2014 Please don't ignore the possibility of an Affiliated Service Group.
EBDI Posted April 1, 2014 Author Posted April 1, 2014 Lou, you are so right! I meant to type Owner C has 48%. Thanks to both of you.
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