AlbanyConsultant Posted Tuesday at 08:58 PM Posted Tuesday at 08:58 PM I've been presented with this situation: Two spouses own two S-corps - MS owned by J 51% and her husband O 49% OC owned 100% by O It's a controlled group because O owns part of MS. Each business has only one other employee, an NHCE. OC has a 401k plan (I don't have any other details yet). Of course, J wants a 401k plan to cover MS... and only MS. I want to say that as long as the populations are stable, then this is OK. No matter what feature I put into the MS plan, I'll either have: 1 HCE benefitting, 1 HCE nonbenefitting, 1 NHCE benefitting, and 1 NHCE nonbenefitting = 1/2 / 1/2= 100% or 2 HCE benefitting, 2 NHCE benefitting = 2/2 / 2/2= 100% This seems... simplistic? Like I'm missing something? What trap am I unwittingly walking into (other than the one where one of the NHCEs leaves and the testing fails and it's a disaster). Thanks!
CuseFan Posted Wednesday at 07:11 PM Posted Wednesday at 07:11 PM You've got it. Forget the CG and just think 2 HCEs and 2 NHCEs where you cover 1 of each. Yes, if the covered NHCE leaves then you would need to add the other ER and its NHCE. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
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