Subscribe Now!
Free Daily News, Jobs, Webcasts, Discussions
Display and Distribute
Your Job Openings
COVID-19 News
COVID-19 Webcasts

Featured Jobs

Senior Retirement Plan Administrator

Goldberg, Swedelson & Associates
(Telecommute / Encino CA)

Goldberg, Swedelson & Associates logo

5500 Specialist

401K Generation
(Altamonte Springs FL)

401K Generation logo

Defined Benefits Combo Cash Balance Consultant

Loren D. Stark Company (LDSCO)
(Telecommute)

Loren D. Stark Company (LDSCO) logo

Defined Contribution Administrator

PACETPA
(Telecommute / Clovis CA / Las Vegas NV)

PACETPA logo

Director, Retirement Benefits

Wespath Benefits and Investments
(Telecommute / Glenview IL)

Wespath Benefits and Investments logo

Trust Funds Accountant

RFK Medical Plan/JDLC Pension Plan
(Keene CA)

Defined Contribution Plan Administrator

401k America
(Telecommute / Chino CA)

Manager, Defined Contributions Administration

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

Client Service Manager

July Business Services
(Telecommute / Waco TX)

July Business Services logo

Free Daily News and Jobs

“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

Half-Year Exclusion for ASGs

(Posted February 22, 2003)

Question 252: A corporation is not a component member of a controlled group for a given year if the corporation is not a member during at least half of the days that precede December 31. Are there any such rules for the purpose of determining affiliated service groups? What if a service corporation is a member of an affiliated service group on January 1 but terminates its affiliation with the service group in March?

Answer: I fear you are laboring under a misapprehension about controlled groups. Let me do my best to rectify it. so you will then understand my response for ASGs.

It is true that IRC 1563(b) contains the component member rule you describe. (Q 9:5. References to "Q" are to numbered questions addressed in the third edition of Who's the Employer; they can be viewed online by subscribers.) Thus, for ordinary income tax purposes, if you are in a controlled group for half the year, you're in, and if not, you're out.

But this rule is totally irrelevant for retirement plan purposes. (Q 9:3.) See Reg. 1.414(b)-1(a). Effectively, this means that controlled group status is determined on a day-by-day basis for retirement plan purposes. (Q 9:11 and Q 11:11.)

Does it then come as any surprise that no similar half-year rule exists for ASGs? Like controlled groups, affiliated service group status is determined on a day-by-day basis. If ownership changes or a relationship ends to terminate ASG status, then from that point on the businesses are separate but before that date they are treated as a single employer.

This result is unsatisfactory in many respects, but it is unquestionably the result that the law provides.


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)

© 2020 BenefitsLink.com, Inc.