Featured Jobs

Director, Retirement Benefits

Wespath Benefits and Investments
(Telecommute / Glenview IL)

Defined Contribution Plan Administrator

401k America
(Telecommute / Chino CA)

Defined Contribution Administrator

PACETPA
(Telecommute / Clovis CA / Las Vegas NV)

Defined Benefits Combo Cash Balance Consultant

Loren D. Stark Company (LDSCO)
(Telecommute)

Trust Funds Accountant

RFK Medical Plan/JDLC Pension Plan
(Keene CA)

Client Service Manager

July Business Services
(Telecommute / Waco TX)

5500 Specialist

401K Generation
(Altamonte Springs FL)

Manager, Defined Contributions Administration

Definiti
(Telecommute / The Woodlands TX / University Place WA / Dallas TX / Erie PA / Canonsburg PA / West Palm Beach FL)

Senior Retirement Plan Administrator

Goldberg, Swedelson & Associates
(Telecommute / Encino CA)

Free Daily News and Jobs

“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

No Sibling Attribution In Controlled Groups

(Posted July 1, 2002)

Question 207: Is there attribution between brothers and sisters for controlled group purposes? If so, perhaps the situation below is a controlled group.

Answer: No, there is never attribution between siblings for controlled group purposes. Here is the fact pattern involved:

Owner	Corp X	Corp Y	Corp Z
John	13%	50%	0%
Joanne	42%	50%	0%
Maria	16%	0%	34%
James	13%	0%	33%
Frank	16%	0%	33%

John and Joanne are brother and sister. Maria, James, and Frank are children of John. All persons named are over 20.

There are two key attribution rules applicable here:

There is never attribution based on family status between siblings under the controlled group rules. For that matter, there is no sibling attribution under the IRC 318 attribution rules for HCEs, key employees, and traditional affiliated service groups.
A parent is deemed to own the stock of his or her adult (21 or older) children only if the parent already owns, or is deemed to own, more than half of the company.

Put those rules together, and there is no attribution between anybody you've listed on the facts you have given.

Given that, it is clear that there is no controlled group. Y and Z do not have any overlapping owners. X and Z have overlapping owners, but they hold less than half of X, and so effective control cannot exist. X and Y have overlapping owners, but they own less than 80% of X and so a controlling interest cannot exist. So, the three companies are totally separate for retirement plan purposes.

The controlled group attribution rules are laid out in detail in Chapter 7 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.