Retirement, LLC
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Bates & Company
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Retirement Plan Legal Specialist Pentegra
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Nova 401(k) Associates
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Central Pension Fund of the IUOE
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Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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Compass Retirement Consulting Group, Inc.
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Carpenter Morse Group
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Trucker Huss, A Professional Corporation
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United 401(k) Plans, Inc.
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Central Pension Fund of the IUOE
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Nicholas Pension Consultants
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Prime Pensions, Inc.
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Question 164: Is this an affiliated service group? Company A sells property and casualty insurance. Company B sells life insurance, group insurance benefits, retirement planning and financial planning. Company A owns 49% of Company B. Both companies regularly refer clients to each other. There are no shared employees or expenses. The only connection between the two companies is the mutual referrals. | ||
Answer: There's little wonder that you aren't confident, considering the fuzzy nature of the ASG rules. Let's start, though, by looking at something that isn't fuzzy.
If it were my client, I would advise them to incorporate Company B and eliminate the issue. If they didn't want to do that, I would urge them to request a determination letter from the IRS on the issue. If the case came before Judge Watson, I'd rule that cross-referrals without anything else-- such as common employees, advertising, offices, etc.-- does not make two businesses regularly associated. It is interesting to compare your situation with an example taken from the B-Org portion of the proposed regs. The main difference in the example in the regulations is a stipulation that one business directly performs services for the other business.
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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.
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