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

Featured Jobs

Retirement Plan Administrator

ForUsAll
(Remote)

ForUsAll logo

Customer Success Associate

Guideline, Inc.
(Remote / Austin TX / Solana Beach CA / Portland ME / San Mateo CA / CO / FL / GA)

Guideline, Inc. logo

Retirement Plan Administrator

Great Lakes Pension Associates, Inc.
(Remote)

Great Lakes Pension Associates, Inc. logo

Retirement Plan Administrator

Fulton Bank / Fulton Financial Advisors
(Remote)

Fulton Bank / Fulton Financial Advisors logo

Client Service Specialist

EPIC RPS
(IL / IN / MA / MD / ME / NC / NH / NY / PA / TN / VA / VT)

EPIC RPS logo

Legal Assistant / Paralegal / Plan Document Specialist

Witman Stadtmauer, P.A.
(Remote / Florham Park NJ)

Retirement Operations Specialist

Fringe Benefit Group
(Remote)

Fringe Benefit Group logo

Manager, Client Relationship Management

Guideline, Inc.
(Remote / Solana Beach CA)

Guideline, Inc. logo

Mathematician or Benefit Analyst (Part-time)

American Pension, LLC
(Berkeley Heights NJ)

American Pension, LLC logo

Account Manager

Pentegra
(Remote / West Harrison NY)

Pentegra logo

Product Support Specialist - Conversions

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

ftwilliam.com part of Wolters Kluwer Legal & Regulatory logo

Client Service Manager

July Business Services
(Remote)

July Business Services logo

Plan Administrator

Aimpoint Pension
(Remote)

Aimpoint Pension logo

Retirement Plan Administrator

Retirement Solutions Specialists, LLC
(Remote)

Retirement Solutions Specialists, LLC logo

DB Plan Administrator

Aimpoint Pension
(Remote)

Aimpoint Pension logo

Trust Accounting/5500 Specialist

Sentinel Benefits & Financial Group
(Remote / Wakefield MA)

Sentinel Benefits & Financial Group logo

Senior Plan Administrator

Fiduciary Consulting Group
(Remote / Murfreesboro TN)

Fiduciary Consulting Group logo

DB/DC Administrator

Primark Benefits
(Remote / San Mateo CA)

Primark Benefits 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

Controlled Groups, Common Control and SEPs

(Posted September 4, 2001)

Question 123: Because a SEP is not a qualified plan, can two sole proprietors (X and Y) that are members of a controlled group have two separate SEPs and ignore the controlled group rules?

Answer: No. Of course, two sole proprietorships technically couldn't be a "controlled group" because that applies only to incorporated entities, but they could be a group of trades or businesses under common control pursuant to Code section 414(c), perhaps through the attribution rules.

Either way, the answer is the same. Both IRC 414(b) and 414(c) refer not only to the controlled group rules, but also to the SEP rules and the SIMPLE rules. Thus all employees of both X and Y are deemed to be employed by a single employer for purposes of SEPs, SIMPLEs, and qualified plans. Accordingly, when the SEP rules require that all employees meeting certain requirements be covered, that includes all employees at both proprietorships.

Now, I have a question for you: you knew it was too good to be true, didn't you?

For more information on the effect of controlled group or common control status, see Chapter 10 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.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2022 BenefitsLink.com, Inc.