HCEs work at two locations of car dealership.

[Tapestry]

I have a prospect with two car dealerships. They have multiple employees who work at both locations, including two HCEs who work at both locations but only take a salary at one. This gives me two HCEs in the one company with zero pay and zero deferrals. One of the HCEs is the owner so I can’t really mark him as terminated in the plan where he does not have comp. What would you do in this situation? Do I leave them in the test?

My questions for them are:

1.  Are there two plans or one

2. Is this a controlled and/or affiliated service group, i.e., an employer with multiple entities ( to which all entities singed a participating employer agreement) and as a result all such entities participate in this single plan.

Anything else I should know?  I assume I can test combined or separately, as long as 410(b) passes separately

[MoJo]

1.  I don't know.  You tell me if there are two plans or one.  That is a fact you need to provide.

2.  I don't know.  You tell me if they are part of a controlled group/affiliated service group.   Are the two locations just two locations of "one" company, or are they each a separate entity?  Who are the owners?  If they are "separate" entities are they under sufficiently common ownership (a mathematical test that results in the answer with certainty) to be a controlled group?  If they aren't a controlled group, what attributes of an ASG do they have?

I don't mean to be flippant - but you need to provide a lot more facts for anyone to determine what the scenario is, and even what your question is (or should be).

[ESOP Guy]

If they aren't a controlled group why are these people working for "free" for one of the dealerships?

I am also not trying to be flippant but in fact is the dealership that isn't paying these people in fact reimbursing the dealership that is cutting the checks?  Or put another way why is someone working for "free" for a dealership?  Obviously, the check they are getting is paying them for their work at both dealerships.  So why is only one of them cutting a check? 

As MoJo says I think you are looking at it correctly but need more facts. 

[david rigby]

Two dealerships does not automatically mean two companies. 

BTW, maybe address the original questions to legal counsel for the Employer?