Controlled group. Husband/wife/2 children

[thepensionmaven]

Husband and spouse own one company 50/50; their two sons own another company 50/50.  Technically the companies are related - both companies are in the same industry, but perform different functions within the industry.  Some employees work for both companies.

Both companies sponsor separate profit sharing plans. One of the sons in his company defers, so the plan was amended to SHNE.

The son is also an employee and participant in the other plan and no one in that plan defers.

Doesn't this plan have to be amended to a SHNE plan?

[C. B. Zeller]

Assuming both children are over 21, there is no controlled group. Attribution for controlled group purposes is determined under the rules of sec. 1563, which says that ownership is attributed between parents and children (and grandchildren) only if the person being attributed the ownership otherwise owns more than 50% of the entity.

There might be an ASG, which uses the sec. 318 attribution rules, if either of the businesses are service organizations.

[thepensionmaven]

This looks to be an ASG, would not both plans have to offer the 401K option and likewise do the SHNE if one employers' plan does?  And amend that plan to a SHNE 401K?

[Mike Preston]

9 hours ago, thepensionmaven said:

This looks to be an ASG, would not both plans have to offer the 401K option and likewise do the SHNE if one employers' plan does?  And amend that plan to a SHNE 401K?

Not if they independently satisfy 410(b).

[thepensionmaven]

And they both pass, both are new comp formula, 410(b) as well as 401(a)(4) passed separately as well as combined.

I have received SO many conflicting opinions from other TPAs, this IS a controlled group/ASG, this is NOT a controlled group/ASG.

I'm going with Mike.

TX.