affiliated service group question

[Tom]

Dentist Sue owns 100% of LLC(1) and dentist Bill works PT for this LLC.  14 eligible covered employees in Sue's LLC(1) plan.

Dentist Sue and Bill purchase a practice about 10 miles away, they form LLC(2) with Sue owning 80% and Bill 19%.  I assume they will both see patients at both locations.  LLC(2) will co-sponsor Sue's LLC(1) existing 401(k) plan.  This will add 8 covered employees for then a total of 22. 

Dentist Bill also owns 100% of dental practice LLC(3) 15-20 miles away.  Sue has no ownership, nor does she work there.  LLC(3) has no 401(k) plan.  They are asking if they must cover these employees in the plan shared by LLC(1) and (2).  The easy answer is 22/30 covered = 73%.  Assuming my estimated coverage is correct, LLC(3) need not be covered.  I realiz this will have to be carefully reviewed every year.  

But, does anyone see an ASG here?  I don't believe there will be any association of patients between LLC(2) and (3) for dentist Bill.  The practices are distant enough, patients won't associate one with the other.  

Does that seem reasonable?  Thank you!

 

[Tom]

Correction to my math. LLC(3) has 6 eligible so 22/28 78%+ coverage assuming LLC(3) does not participate in the plan. Fairly safe coverage ratio.