Is this plan covered by PBGC?

Hi

Veterinary, PLLC, 10 participants, 2 owners (50/50) and their spouses

Controlled group with Corp X, LTD, employees are the spouses only and it does not perform veterinary services nor any other professional services.

Is the DB plan covered by PBGC?

Thanks

I wouldn't think so. The Veterinary PLLC is a professional service corp so it wouldn't be covered and the Controlled group Corp X only employs owners and their spouses.

But as always, the best way to find out is ask the PBGC for a coverage determination.

Agreed on that. Corp X only employs the spouses, not the owners. Would that make a difference?

14 minutes ago, Jakyasar said:

Agreed on that. Corp X only employs the spouses, not the owners. Would that make a difference?

I don't think it does if X is a corporation. From the PBGC site -

Substantial owners plans

A private-sector qualified defined benefit plan is exempt from PBGC coverage if it is established and maintained exclusively for substantial owners of the plan sponsor (i.e., if all participants are substantial owners). 

A participant is a substantial owner if, at any time during the last 60 months, the participant:

• Owns the entire interest in an unincorporated trade or business, or
• In the case of a partnership, is a partner who owns, directly or indirectly, more than ten percent of either the capital interest or the profits interest in such partnership, or
• In the case of a corporation, owns directly or indirectly more than ten percent in value of either the voting stock of that corporation or all the stock of that corporation.

The constructive ownership rules, including spousal attribution rules, of IRC § 414(c) and § 1563(e) apply only in the case of a corporation.

Thanks Lou, 1563e is where I am thinking about.

Definitely needs to go to PBGC

Much appreciate it.