Who's the Employer?

Answer: Yes. But that doesn't say much.

Let me put it to you this way. If I own a bakery, and my next door neighbor, Charlie, owns a law firm, and Ann, who is a stranger to both of us, is a doctor, all three of us can cover our employees under the same qualified plan. This is a "multiple-employer" plan. Although we are treated as a single employer for purposes of counting service under the terms of the plan, we are separate employers for purposes of all the various nondiscrimination tests in the Internal Revenue Code. That means each employer will need to test separately to see if its portion of the plan meets the coverage and vesting requirements in the Code.

The interesting question is whether these restaurants will be treated as a single employer for purposes of the nondiscrimination tests, so all the tests are run once for the whole group. That will be a function of whether a controlled group exists between them. The controlled group rules are very much a function of ownership, with some detailed attribution rules. Some members of families (such as spouses, or parents and their children under 21) are lumped together, so that, for example, my wife is deemed to own my stock. Other family members (such as brothers and sisters) are totally separate. So, without knowing more about your situation, it is impossible for me to comment on whether a controlled group exists, except to suggest that you ought to have an attorney review the issue specifically.

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