Pension RC Posted May 27, 2014 Posted May 27, 2014 A 50% owner of a company earned a benefit under the company's DB plan. Now she has started her own company of which she is the 100% owner and she would like to start a new DB plan. My reading of IRC Section 415(g) is that her benefits from both plans must be aggregated for 415 purposes. Is this correct? Thanks!
Andy the Actuary Posted May 27, 2014 Posted May 27, 2014 Agree. IRC Sec. 415(h). This is to prevent setting up lots of little companies to flout the 415 restrictions. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
Pension RC Posted May 27, 2014 Author Posted May 27, 2014 On second thought - Isn't it okay since she doesn't own more than 50% of the first company?
Andy the Actuary Posted May 27, 2014 Posted May 27, 2014 So long as 50% means exactly 50%, 415(h) should not apply. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
12AX7 Posted May 28, 2014 Posted May 28, 2014 Did the rules change that extended the 415 restrictions to "brother-sister" type arrangements? I'm reading that it applies only to parent-sub groups (greater than 50%). The OP example appears to be brother-sister, but the threshold is not enough either way.
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