Calculating Match for Related Employers

Suppose the following:

A 401(k) safe harbor retirement plan covers two related companies - Company A and Company B.  Employee has ownership in both Company A and Company B.

Employee has wages of $30,000 in Company A and defers the maximum pre-tax deferral to the retirement plan.  Company A matches those wages up to 4% for a match of $1,200 ($30,000 x 4%).

Employee also has wages of $100,000 in Company B.  No employee deferrals here since those were already maxed in Company A.

Do the wages get aggregated since the Companies operate one plan such that the wages in Company B should also be matched?  Does Company B owe a match to Employee of $100,000 x 4% = $4,000?

A reference to authoritative literature on this would be helpful.  I have searched with different terminology but have not found what I need.  Thanks.

What is the plan's computation period for the safe harbor match?  Plan year, pay period, month, quarter, etc.?   If it is annually, then a true-up contribution would be needed from Company B for the $4,000 since the employee contributed more than 4% of their total plan compensation of $130,000.  If it is per pay period, there would be no match as there were no employee deferrals made at Company B.  If per month or quarter, there may be a true-up needed if the wages for both companies were paid in the same month or quarter. 

You may also need to consider if Company A is paying more match than they should if the calculation is based upon pay period, month, or quarter, and they did not contribute equally during each pay from Company A.  For instance, if contributing 100% of wages up until they hit the maximum allowed during the year, then they may have had no contribution in the last couple pay periods at Company A as they would have been over the annual threshold of $19,500 in 2021 ($26,000 if they qualify for catch-up contributions).

Thank you so much.  The match computation is for the plan year, so a match on the total compensation would be needed.

On 7/9/2022 at 2:59 PM, Laura23 said:

covers two related companies - Company A and Company B.

Related enough to be a controlled group or affiliated service group under 414(b), (c), or (m), Laura23? Would really make a difference.

15 hours ago, Luke Bailey said:

Related enough to be a controlled group or affiliated service group under 414(b), (c), or (m), Laura23? Would really make a difference.

A controlled group by brother-sister relationship.

Anything obvious in the plan's definition of Compensation OR the section on participating employers adopting the plan?  This feels less like a regulatory question so much, as opposed to plan document interpretation.