Controlled group - is it PBGC covered?

[Jakyasar]

Hi

Company A is a medical office, small i.e. less than 25 active participants. Owned 100% by MD

MD also owns couple of restaurants with employees.

2 part question:

Q1: If all included in the DB plan, Company A being the sponsor and the restaurants being adopting employers, is this DB plan covered by PBGC? The total active participants will still be under 25.

Q2: If only Company A adopts the plan and excludes the restaurants, no PBGC coverage, correct?

Thank you.

[truphao]

A2 - correct

A1 - I am not sure.  In my opinion it would become PBGC covered.   It is probably one of those situation when you would want to ask PBGC to rule on that.

[truphao]

the following example is directly form PBGC website -

Lastly, to qualify for the small professional service plan exemption, the professional individual(s) must be engaged in the same professional service as the principal business of the plan sponsor. For example, consider a situation where:

• Company X is owned by an attorney, John Smith.
• Company X sponsors a defined benefit plan that has never had more than 25 participants.
• Company X’s primary business is the sale of insurance products.

In this scenario, despite the fact that the company’s owner is an attorney (a profession that’s on the statutory list of professional individuals), Company X’s defined benefit plan would not qualify for the professional service plan coverage exception.