Determining 5% Owners in a Controlled Group

[Susan S.]

Company A has a 401(k) plan, with participating employers Company B and Company C. They are a controlled group. Employee X owns 30% of Company B, but has no ownership in companies A or C. Is he still considered a 5% owner for determination of HCE and key?

[rcline46]

Yes

[Lou S.]

More than 5% ownership in any company that is a member of the controlled group makes that person a more than 5% owner for the purposes of HCE and Key-Employee determination.

[BG5150]

Side note: same thing for 1% owner and Key determination.