MEP and family attribution

[Jennifer D.]

I am not sure if I have an open MEP or a closed MEP.  We have an employer owned 100% by the wife, and her company A sponsors the plan.  The husband has a completely different company B where he owns 100%, but to save costs, he has adopted Company A's plan as a participating employer.  There is no crossing of employees, separate payrolls, and no direct ownership of the other's company.  The companies also do completely different things from each other and have no commonality in business dealings.  Is the family attribution between husband and wife enough to make this a closed MEP, or is it an open MEP? (it doesn't actually matter, we just want to report it correctly for this first year)

[K2]

If they are not in a community property state and they have no minor children, then there is no attribution and they are not in a controlled group.  

[austin3515]

Geeze, I would just be REALLY careful that maintaining the plan itself does not blow the spousal exemption. The rule is each spouse cannot "participate in the management of such corporation at any time." I could see a picky auditor picking you apart over that.  Since the stakes are high, I would not commingle anything.  i.e., even if technically correct, you might be in a position where you have to prove your point.

(5) Spouse

An individual shall be considered as owning stock in a corporation owned, directly or indirectly, by or for his spouse (other than a spouse who is legally separated from the individual under a decree of divorce whether interlocutory or final, or a decree of separate maintenance), except in the case of a corporation with respect to which each of the following conditions is satisfied for its taxable year—

(B) The individual is not a director or employee and does not participate in the management of such corporation at any time during such taxable year;