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

Featured Jobs

Retirement Plan Administrator

Fulton Bank / Fulton Financial Advisors
(Remote)

Fulton Bank / Fulton Financial Advisors logo

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote / Rancho Cordova CA / Corona CA)

Nicholas Pension Consultants logo

Pension Plan Administrator

DeMars Pension Consulting Services, Inc.
(Overland Park KS / MO / NE / OK)

Plan Administration Manager

Southern Pension Services
(Remote / Tampa FL)

Southern Pension Services logo

Conversions Specialist

BlueStar Retirement Services, Inc.
(Remote)

BlueStar Retirement Services, Inc. logo

Retirement Operations Specialist

Fringe Benefit Group
(Remote)

Fringe Benefit Group logo

Trust Accounting/5500 Specialist

Sentinel Benefits & Financial Group
(Remote / Wakefield MA)

Sentinel Benefits & Financial Group logo

Plan Administrator

BlueStar Retirement Services Inc.
(Remote)

BlueStar Retirement Services Inc. logo

Retirement Plan Administrator

Prime Pensions Northwest, LLC
(Remote)

Prime Pensions Northwest, LLC logo

Pension Administrator

Actuaries Unlimited, Inc.
(Remote / Los Angeles CA)

Actuaries Unlimited, Inc. logo

Member Services Supervisor

DC Retirement Board
(Remote / Washington DC)

DC Retirement Board logo

Pension Administrator

American Pension, LLC
(Berkeley Heights NJ)

American Pension, LLC logo

Retirement Plan Administrator

Retirement Solutions Specialists, LLC
(Remote)

Retirement Solutions Specialists, LLC logo

DB/DC Administrator

Primark Benefits
(Remote / San Mateo CA)

Primark Benefits logo

Retirement Plan Account Manager

Aegis Retirement Partners, LLC
(Remote / CT / MA / NH / RI)

Aegis Retirement Partners, LLC logo

Manager, Client Relationship Management

Guideline, Inc.
(Remote / Solana Beach CA)

Guideline, Inc. logo

Client Manager DB/DC

CMC Pension Professionals
(Remote / Glendale CA)

CMC Pension Professionals logo

Customer Success Associate

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

Guideline, Inc. 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

Wholly-owned subsidiaries of controlled groups

(Posted March 16, 2000)

Question 45: Company A is a wholly-owned US subsidiary of German Company GA. Company B is a wholly-owned US subsidiary of German Company GB. GA and GB are both wholly-owned by a single German holding company. Are A and B part of a controlled group?

Answer: Yes, for all purposes.

Actually, the answer goes somewhat further than that. A parent-subsidiary group of corporations exists when two conditions exist:

  1. At least 80% of the stock of each corporation other than the parent must be owned by another member of the group; and
  2. The parent, itself, must own at least 80% of the stock of at least one other group member (excluding stock held by subsidiaries).
Both of those conditions are met, and all 5 corporations are part of a single controlled group of corporations.

For ordinary income tax purposes, there is a special rule which says that foreign corporations cannot be "component members" of a controlled group. Thus, for ordinary income tax purposes, we would focus on just the two US corporations. But they should be filing their income tax returns showing that they are part of a controlled group.

For qualified plan purposes, the component member rule does not apply. That means that employees of all 5 corporations are deemed to be employed by a single employer for most all qualified plan purposes. Of course, a plan can exclude nonresident aliens without US source income, but that is your only recourse in this situation. The problems of foreign corporations are discussed in Section 9.10 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.