Commonly Controlled Businesses

[Guest Tim Breedlove]

Client has Sub-S Corp, owned 25% each by himself and 3 over 19 children. The Sub-S Corp (4 employees, all owners)will receive management fees from two LLC's (5 employees in one and 8 employees in other) which Sub-S owns 100% each. If the Sub-S installs 401(k) plan, do they have common control to where the other two LLC's have to be covered?

[KJohnson]

They will at least have to be included in your testing to see if you pass coverage. Since the individuals in the Subchapter S will all be HCEs via ownership, if the employees in the LLCs are not all HCEs you will undoubtedly have to cover some of them.