Management function - Controlled Group

[rmaker]

I have 2 companies A and B owned by 2 separate individuals X and Y respectively.

Company A own by X only have 1 employee, Y

Company B own by Y has 4 employees and one of them is X

Company A derives much of its income from Company B

Company A wants to set up a 401K with defined benefit plan

Company B wants to set up a 401k Safe Harbor

Can they have separate plans or are they part of controlled group by management function?

Thanks in advance for any suggestions.

[Belgarath]

First, and this is semantics, but you're talking about a potential management function affiliated services group. No such thing as a management function controlled group. I say this only because when you are looking for formal guidance, which is somewhat sparse on this subject, it (the terminology) matters.

Second, impossible to tell from the facts given. And this type of situation is very much driven by facts and circumstances.

Have you already ruled out ANY type of attribution - not just family, but options, etc.? What is the precise relationship between the companies, and what functions are being performed, and by whom?

You really should take this to an ERISA attorney.

[John Feldt ERPA CPC QPA]

You could look through Derrin's posts on this website under the Message Board Q&A Columns under Who's the Employer?

Especially, Q&A 16, 21, 40, 102, 108, 216, and 276.

[david rigby]

For those not familiar with Derrin:
http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer

[rmaker]

Can someone refer me an ERISA attorney? Thank you for any help

[david rigby]

Got several, in NC, GA, SC, VA, DC.

Do you have a geographic consideration?

[rmaker]

We're in California but don't have geographic consideration. Just need one who does Affiliated Group analysis.

Thank you!

[david rigby]

Glad to help. Please send me your contact information to: davidp.rigby@yahoo.com