Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Retirement Plan Administrator

CMC Pension Professionals
(Remote)

CMC Pension Professionals logo

Retirement Plan Relationship Manager – DB or DC Focus

Trinity Pension Consultants
(Remote / Akron OH / AL / IN / KY / MO / TN)

Trinity Pension Consultants logo

Senior Defined Contribution Account Manager

Nova 401(k) Associates
(Remote)

Nova 401(k) Associates logo

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote / Rancho Cordova CA / Corona CA)

Nicholas Pension Consultants logo

Site Manager / Senior Administrator

Nicholas Pension Consultants
(Remote / AZ / ID / NM / NV / UT)

Nicholas Pension Consultants logo

Compliance Analyst - 401(k) Administration

Ubiquity Retirement + Savings
(Remote / San Francisco CA)

Ubiquity Retirement + Savings logo

Chief Pension Actuary

Loren D. Stark Company
(Remote)

Loren D. Stark Company logo

Retirement Plan Administrator

Hessel & Associates, LLC
(Remote / IL)

Hessel & Associates, LLC logo

Retirement Plan Administrator

Hicks Pension Services
(Remote)

Hicks Pension Services logo

DC Administrator

United Benefit Pensions Inc.
(Remote / Melville NY)

United Benefit Pensions Inc. logo

Distribution \ Loan Clerk

Retirement, LLC
(Remote / Oklahoma City OK)

Retirement, LLC logo

Compliance Specialist II

EPIC RPS
(Remote)

EPIC RPS logo

Pension Administrator

MGKS
(Remote / Phoenix AZ)

MGKS logo

Plan Administrator

Aimpoint Pension
(Remote / Pompano Beach FL)

Aimpoint Pension logo

Benefits Supervisor

NFL Player Benefit Office
(Baltimore MD)

NFL Player Benefit Office logo

Junior Implementation Specialist - 401(k) Administration

Ubiquity Retirement + Savings
(Remote / San Francisco CA)

Ubiquity Retirement + Savings logo

Plan Administrator Consultant

Jocelyn Pension Consulting
(Remote / Boulder CO)

Jocelyn Pension Consulting logo

Manager - Defined Contribution Plans

M2B Retirement Consulting LLC
(Remote / Wexford PA)

M2B Retirement Consulting LLC logo

401(k) Retirement Plan Administrator

Midwest TPA with Remote Workforce
(Remote / Beachwood OH)

Enrolled Actuary

Loren D. Stark Company
(Remote)

Loren D. Stark Company logo

View More Employee Benefits Jobs

Free Newsletters

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

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

BenefitsLink > Q&A Columns >

Who's the Employer?

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

Are Brothers and Sisters Related Parties?

(Posted April 16, 2001)

Question 94: Nursing Home Management Company manages 3 nursing homes as its sole business. Aaron owns one of the homes, Betty owns the second, and Charlie owns the third. Aaron is Betty's brother and Charlie is her half-brother. Are these businesses an affiliated service group under 414(m)(5)? All four businesses are incorporated.

Answer: Yes. A management function type of affiliated service group consists of a business that has the principal business purpose of managing 1 other business (or entities related to that business).

The question then is whether the three nursing homes are related. The definition of related parties for purposes of IRC 414(m)(5) is in IRC 267, which has its own set of attribution rules. Unlike the attribution rules under IRC 318 (which determine HCEs) and IRC 1563 (which determine controlled groups), under IRC 267 for related parties there is attribution between siblings and half siblings.

Accordingly, Betty is deemed to own, for purposes of IRC 267, all stock held by her brother and half-brother. So Betty is deemed to own all three nursing homes 100%. Not surprisingly, those three corporations all would be related parties.

Now Nursing Home Management has, as its sole business, the management of Betty's corporation and two other corporations that are each related to Betty's corporation. These four entities thus make a single management function group under IRC 414(m)(5). All employees of any of the four corporations are deemed to be employed by a single employer for a host of Internal Revenue Code purposes.

The related party rules are discussed in more detail in Chapter 17 of my book, Who's the Employer?. There also is a new appendix D in the second edition of my book, which compares the three sets of attribution rules and makes it much simpler to understand the differences between these systems.


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.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2022 BenefitsLink.com, Inc.