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Posted

If a school district sets up a foundation and funds the foundation (and perhaps has the ability to hire and fire board members), is it possible that the foundation and school could be in a controlled group?

Not sure if this is a thing, but my first google search found no results... 

Austin Powers, CPA, QPA, ERPA

Posted

It seems to me that a governmental entity can't be part of a controlled group? I haven't actually done any research on the question - just my assumption...

Posted

If your client needs to sort out whether the foundation and the school district might be treated as one employer for the purposes Internal Revenue Code § 414 refers to regarding § 403(b) or § 457(b), or whether the foundation’s employees might participate in a non-ERISA governmental plan with the related school district (even if the foundation is not a part of the same employer as the school district), it could engage Carol Calhoun, a leading national expert on those issues and a lead author of Governmental Plans Answer Book.

https://www.venable.com/professionals/c/carol-v-calhoun?accordion=credentials

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

Posted

My recollection is that the regs regarding non-profit entities (501(c)(3) ?) suggest a controlled group concept involving shared Board members and 

control by one entity over the other. That's my recollection without looking it up. But Peter is right, Carol is the person to ask and I have worked with her firm in the past.

Posted

That rule—26 C.F.R. § 1.414(c)-5—refers to an 80% overlap in the governing bodies of exempt organizations, which the rule describes as “an organization that is exempt from tax under [Internal Revenue Code] section 501(a)[.]” https://www.ecfr.gov/current/title-26/section-1.414(c)-5.

Although a public-school district is not subject to Federal income tax, that results from law other than I.R.C. § 501(a).

Further, even if one were to interpret I.R.C. § 414 to treat a public-school district and a foundation as one employer, that might not necessarily answer questions about whether a governmental plan may cover the foundation’s employees without losing ERISA’s governmental-plan exemption.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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