Controlled Group & 2018 contributions

[Pammie57]

A partnership with 3  related partners normally funded their contribution separate from another business owned by them with several other people.  Until 2018 they were not controlled group.  This year, the same 3 people (family members) own both companies.   So the question is not If they have to pass coverage as a controlled group of employees/participants, but whether the Owners can fund their $55,000 max contribution through either plan?   or do they have to fund  it through the 2nd company with all of the employees/participants?   It's confusing and I've never run into that before where they wanted to fund it to manipulate profit in one company.  Help!

[C. B. Zeller]

Are they relying on the 410(b)(6)(C) transition rule? If so they can not significantly change benefits during the transition period, other than by reason of the change to a controlled group. If, for example, they were doing deferrals only in one plan and profit sharing in the other, I would not suddenly start doing the profit sharing in the first plan. If they were maxing out in both plans prior to the change, then they should be ok to max out this year in whichever plan they want.

[Luke Bailey]

OK. Another variant of your question, Pammies57. If both companies have adopted the plan and the individuals have time and comp from each company, then either company may (depending on plan terms) be able to determine contributions. Since (you tell us) this is a controlled group, you have only one 415(c) limit per individual.