metsfan026 Posted March 2, 2022 Posted March 2, 2022 Quick Question: Company A - Husband owns Company B - Wife owns, currently all work done for Company A The plan is for Company B to start expanding and doing legal services for additional clients. What is the fallout for setting up separate plans for Company A and Company B? Can they do it, or do we have an affiliated service group issue?
C. B. Zeller Posted March 2, 2022 Posted March 2, 2022 ASG or not, this certainly appears to be a controlled group. With the wife doing work for the husband's company it is likely that the spousal non-involvement exception does not apply. There is nothing stopping them from setting up separate plans. Are there any employees? If there are non-HCEs then the plans may need to be aggregated for testing. Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
Luke Bailey Posted March 4, 2022 Posted March 4, 2022 On 3/2/2022 at 2:08 PM, C. B. Zeller said: There is nothing stopping them from setting up separate plans. Are there any employees? If there are non-HCEs then the plans may need to be aggregated for testing. C.B. Zeller, no problem for separate DC plans, but DB would run into 401(a)(26) if controlled group, right? Bill Presson 1 Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034
C. B. Zeller Posted March 4, 2022 Posted March 4, 2022 10 hours ago, Luke Bailey said: C.B. Zeller, no problem for separate DC plans, but DB would run into 401(a)(26) if controlled group, right? Yes indeed - you can't aggregate plans for 401(a)(26), so they would need to have a single plan covering both employers in this case. Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
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