Retirement, LLC
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Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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United 401(k) Plans, Inc.
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Nicholas Pension Consultants
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Retirement Plan Legal Specialist Pentegra
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Compass Retirement Consulting Group, Inc.
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Central Pension Fund of the IUOE
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Nova 401(k) Associates
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Carpenter Morse Group
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Prime Pensions, Inc.
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Trucker Huss, A Professional Corporation
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Central Pension Fund of the IUOE
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Bates & Company
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Question 301: What is the definition of a "related employer"? |
Answer: Like so many terms, the definition depends on the context. Why are you asking? I'm going to be bold enough to assume that you are asking in the context of this column, which deals with retirement plans. When I use the phrase "related employer," or say "these employers are related" when talking about qualified retirement plans, I am referring to businesses that are treated as a single employer under the law. This includes:
The same rules apply to other issues. Suppose A and B (still related) each sponsors a profit sharing plan and each contributes $49,000 to Oscar (who owns both companies). If A and B were not related, that would be just fine (better than fine, in fact, if you're Oscar). But since A and B are related, the law treats them as one employer. One employer cannot provide, under any and all defined contribution plans it sponsors put together, more than $49,000 of employer contributions to an employee during 2011. Technically, there's one other way to be a related employer. The IRS has authority to write rules under Code §414(o) to make two businesses related. There are proposed regulations that have been sitting on the books for over 20 years, and the IRS has never finalized them. Until they are finalized, they have no effect. |
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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