Subscribe Now!
Free Daily News, Jobs, Webcasts, Discussions

Featured Jobs

Director of Finance

NYCDC of Carpenters Benefit Funds
(New York NY)

DB/DC Administrator

Primark Benefits
(Telecommute / Burlingame CA)

DC Retirement Plan Administrator

The Nolan Company
(Telecommute / Overland Park KS)

Retirement Plan Consultant / Relationship Manager

Associated Pension Consultants
(Chico CA / Sacramento CA)

401(k) Consultant

TPS Group
(Telecommute / North Haven CT)

Product Support Consultant

ftwilliam.com part of Wolters Kluwer Legal & Regulatory
(Telecommute)

DC Administrator

MGKS
(Telecommute / Phoenix AZ)

Manager, 5500 Team

401K Generation
(Altamonte Springs FL)

Retirement Plan Administrator

Premier Plan Consultants
(Telecommute / San Diego CA)

DB Retirement Plan Administrator

The Nolan Company
(Telecommute / Overland Park KS)

Defined Benefit Retirement Plan Administrator

Benefit Associates, Inc.
(Telecommute / Huntington Beach CA)

401(k) Implementation Manager

Human Interest
(Telecommute / San Francisco CA)

Director of 401(k) Implementation, Core

Human Interest
(Telecommute / Mill Valley CA)

Employee Benefits/Health and Welfare Attorney

Miller Johnson
(Telecommute / Grand Rapids MI / Kalamazoo MI / Detroit MI)

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Parent-Subsidiary Groups

(Posted July 14, 1999)

Question 28: If a parent corporation has 4 wholly-owned subsidiaries, and together the 4 subs each own 25% of a new sub, are the employees of the new sub considered to be employees of the parent corporation?

Answer: Yes. The parent and all 5 subs are a single parent-subsidiary controlled group.

The formal definition of a parent-subsidiary group in IRC 1563(a)(1) says that 80% of each sub in the group must be owned by "one or more of the other corporations" in the group. Because 100% of the new sub is owned by other subsidiaries, it is part of the controlled group, even though the parent doesn't own a single share directly.

As part of the controlled group, all employees of all 6 corporations are deemed to be employed by a single employer.

For more on parent-subsidiary groups, see chapter 6 of my book Who's the Employer?

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.