Control group Simple IRA

[Bruce1]

An individual has 100% ownership of two separate companies company A and company B. With having a brother-sister control group. 

My question(s) are:

1. Is it safe to assume this individual can sponsor two individual SIMPLE IRA plans, one for each company and be considered compliant with control group rules?

2. Would it not be acceptable to sponsor a SIMPLE IRA at one and a SEP IRA in the other?

3. Would it not be acceptable to sponsor a SIMPLE IRA at one and a 401(k) PS in the other?

Thank you. 

 

[Bill Presson]

A SIMPLE IRA has to be the exclusive plan for the employer (which equals both entities), so I don’t see any of these examples working. 

[austin3515]

Bruce1 not sure what the motives are here. 

1) Is it the names?  So for example if one company is a landscaping business and the other is a real estate agency perhaps the employer names would be confusing.  I'm sure others would think I'm way off base but if you kept all elections perfectly identical (including the same provider) and had two "plans", the term "no harm no foul" does come to mind...  The IRS rule is obviously to make sure both companies are treated the same. What would the IRS correction be if two identical plans were used, one for each entity?  Everyone was eligible for the same SIMPLE.  To all of those who say "What is the big deal it's just a name" I would only say they may very well have a reason where if you heard it you might say "oh that's a good reason, I get that."

2) Is it banking?  I would assume the financial institutions can handle this. 

[Bruce1]

Essentially the answer to my question is the plan sponsor needs to set up one retirement plan and offer it to all employees under one umbrella? Although as @austin3515 mentioned if the plans had identical provisions it doesn't make sense in my mind why the two businesses couldn't individually sponsor a SIMPLE IRA with the same benefit provisions. 

[John Feldt ERPA CPC QPA]

The rules under 408(p) rules say a SIMPLE must be the exclusive plan for the Employer and Employer is defined as all businesses in the controlled group/affiliated service group. 

[austin3515]

On 9/15/2025 at 7:47 AM, austin3515 said:

I'm sure others would think I'm way off base

That's one so far, LOL.  Just for the record what John Feldt says of course is 100% accurate.  I have often described that there is in my view a spectrum of right and wrong. 0 is everything is done perfectly.  Having a SIMPLE IRA for the employees in Company A, and maxing out the sole employee of Company B (who is the sole owner of both A and B) via a SEP for Company B clocks in at a 10 on this spectrum (maybe even an 11!).  To me two identical SIMPLE IRA's for Landscaping Co and Real Estate Co is a 1 or a 2.  In fact I would explain how there is really one plan in this scenario because a SIMPLE IRA is just a bunch of IRA's anyway.  That 2nd Adoption Agreement? That was just an administrative workaround to get the naming right so the employees don't get confused.  And I would mention banking information too.

I have worked with a lot of people who believe the spectrum of right and wrong goes from 0 to 1. 0 being right and 1 being wrong.  A Non-Highly is over-funded by $10? This must be corrected because it is wrong (and by the way, the TPA needs to charge $250 for all the extra work which clients will definitely appreciate). I would posit that there are ZERO plans out there who can boast perfection. I could probably come up with a dozen examples of these imperfections that a TPA will never know about in less than 10 minutes, things that are not detectable (Safe Harbor Notice actually sent? SAR sent?  SPD to new participants?  ALL deposits timely?  That's 4 in 10 seconds).  It is of course reasonable for a TPA to ASSUME the client is doing what we tell them, most of my examples reflect the reality not all of them will.

[Bruce1]

Thanks everyone for your comments.