Controlled group related due to minor children

[Jakyasar]

Here is a new one for me.

DC plan sponsored by Company A

Company A is owned by Dad 75% and Son 25%. They have employees and covered under the plan. MD office

Company B is owned by Son's wife 100%. This company has 2 employees. Dental office

Son and wife have minor children.

2 companies have no connection whatsoever.

This is in New Jersey.

Do I have controlled group issues? I would not be asking if Son owned 100%. Not sure how and if attribution plays a role in here.

To complicate matters, they do not want company B in the DC plan. Company B wants to do SEP.

Thank you

[Bri]

I think the way it works is that, the grandparent's interest in A isn't attributed to the minor child, since minor child owns less than 50% of A.  So minor child isn't owning 100% of company A, just 25%, and you could be in the clear.

[Jakyasar]

Let me see if I understood this correctly.

Minor child is deemed to own 25% of Company A because Son (minor child's dad) owns only 25% of Company A.

Because the minor child owns less than 50% (or is it 50% or less?) and does not get any attribution from grandfather (75% owner), there is no CG issues.

Did I understand this correctly?

It is the attribution that threw me off here.

Thank you

[Bri]

I think that's the way to look at it, you don't double-attribute Grandfather through Father, to Minor.

[Bill Presson]

17 minutes ago, Bri said:

I think that's the way to look at it, you don't double-attribute Grandfather through Father, to Minor.

Correct, no double attribution. And the father doesn't get attributed the grandfather's ownership because the father is over 21 and owns less than 50%. However, the grandfather DOES get attributed the father's stock because he owns more than 50%.

[Jakyasar]

Thank you all for your insights.