Carpenter Morse Group
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United 401(k) Plans, Inc.
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Nicholas Pension Consultants
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Prime Pensions, Inc.
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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, LLC
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Retirement Plan Legal Specialist Pentegra
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Central Pension Fund of the IUOE
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Jr Retirement Plan Administrator/ Administrative Assistant Hochheiser Deutsch & Co, Inc.
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Nova 401(k) Associates
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Trucker Huss, A Professional Corporation
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Central Pension Fund of the IUOE
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Bates & Company
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Question 78: One dental practice is a professional corporation, owned equally by individuals A, B and C. A dental practice in another town is a partnership; individuals A, B, C and D are equal partners. They do not share patients or employees, but individuals A and B work in both offices. Are these businesses under common control? If not, must they have separate plans, and can each dentist deduct $30,000 through each employer? |
Answer: Are they under common control? No. D owns 25% of the partnership but none of the professional corporation, and under the Vogel Fertilizer U.S. Supreme Court case must be excluded. Because A, B, and C own only 75% of the partnership, they do not have a controlling interest, so common control under 414(c) does not exist. Are they an affiliated service group? No. They are not related in providing services to the public, and neither provides services of any kind to the other. If they sponsor separate plans, does each have its own 415 limit? Yes. There is nothing that would join the two plans for 415 purposes. That includes IRC 415(h), which reduces the controlled group requirements for 415 purposes down from 80% to 50%, but only for parent-subsidiary groups, not for brother-sister groups. If they cosponsor a plan, are there two IRC 415 limits? No, that's not the way I read IRC 415(a), which applies the 415 limits on a plan-by-plan basis. IRC 415(f) treats all similar plans of an employer (or by extension through 414(b), (c), and (m), a group of related employers) as a single plan for purposes of applying the limits, but nothing disaggregates contributions from unrelated employers. In other words, if they want separate limits, they should have separate plans and maintain their status as separate employers for plan purposes. |
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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