Separate Plans Maintained by Members of a Controlled Group

[Christopher Wilson]

Hello everyone - I'm double-checking my understanding of the nondiscrimination testing rules with respect to separate plans maintained by members of a controlled group. Each spouse has a separate business and sponsors a plan. Husband receives compensation from his wife's business. When performing nondiscrimination testing for the wife's plan , I believe you only use the compensation paid to the husband from the wife's business, correct? In other words, you don't aggregate compensation paid by two different business even though those businesses form a controlled group. Thank you for your comments. 

[Larry Starr]

1 hour ago, Christopher Wilson said:

Hello everyone - I'm double-checking my understanding of the nondiscrimination testing rules with respect to separate plans maintained by members of a controlled group. Each spouse has a separate business and sponsors a plan. Husband receives compensation from his wife's business. When performing nondiscrimination testing for the wife's plan , I believe you only use the compensation paid to the husband from the wife's business, correct? In other words, you don't aggregate compensation paid by two different business even though those businesses form a controlled group. Thank you for your comments. 

Um... you treat the two plans as ONE; test it as one plan (think of it as two divisions of a single company if that helps).  So you would aggregate the compensation and everything else.  

[C. B. Zeller]

Members of a controlled group are treated as a single employer for purposes of 415, that is, for determining compensation.

However, check your plan documents to see if any compensation is excluded, for example compensation paid by other members of a controlled group which have not adopted the plan.