Controlled group vs multiple employer group

Hi

Husband LLC (filing as an S-Corp and owned 100% by Husband)

Wife LLC (filing as a sole-prop)

Neither entity have employees. No ASG issues.

They have children under age 21

Setting up DC and CB plans for 2023. They are both adopting the plans.

Husband LLC will fund his own portion of the DC and CB and Wife LLC will fund her own portion of the DC and CB.

My understanding:

For 2023, they are a CG so can file as a single employer using 5500-EZ and also can use Schedule SB, correct?

For 2024, they are no longer CG as SECURE 2.0 removed the under age 21 issue based on 1563e (finally).

How do they need to file for 2024 and also do I need to use SB or MB? This is a first for me.

Thanks for your comments.

If they WANT to be a CG, have their atty use a method to make it happen. That can mean being involved in each other's business or using options, etc.

You can force a CG.

Hi Bill

Thank you for the input which I assume is effective for 2024, correct?

Assuming that we cannot force the CG issue, I am assuming we enter into the multiple employer arena, correct?

Correct. Yuck.

Thank you for your input and confirmation, happy and healthy New Year and holidays

Follow up Q

If CG is not an option (some cross ownership), would ASG be ok i.e. some cross biz?

Thinking of legitimate ways of doing this and keeping them as a single employer.

One more Q.

Effective 1/1/2024 no longer CG. When does it need to be fixed so that continues to be a CG (or ASG)?

For example, if no action is taken till March 1, 2024, can 2024 still be CG/ASG with the assumption that January and February will be a multiple employer plan?

I wouldn't worry about a brief non-CG period. Also, Schedule SB is still used for multiple employer plans, you just need to do an SB for each employer. The MB is for multiemployer plans - a different animal.

Very easy to force CG, put wife on husband's S-corp payroll, doesn't have to be material, she just needs to be an employee. I'm sure there are other easy ways as well, having husband somehow formally involved in wife's sole proprietorship.

BUT - your administrative ease should not be the driving force (sorry) behind "to be (a CG) or not to be" question, it should be all the relevant  issues/advantages/disadvantages with respect to their businesses and tax situations as discussed with their accountant (and attorney if necessary).

The problem, which I think, no ownership in the Husband LLC (or payroll) so probably will need to rely on ASG. I will discuss the payroll option (I agree is the cleanest way but what is the minimum payroll to make it CG/ASG, Hmmm)

It is not for my comfort, it is for them and make sure that I can properly/correctly administer the plans. I have no issues with multiple SB's. But it is one 5500SF, correct?

Thank you for clarifying the SB/MB confusion on my part.

Sorry for these questions as I never dealt with this in my career.

1 hour ago, Jakyasar said:

Thank you for your input and confirmation, happy and healthy New Year and holidays

Thanks Jak! Happy Holidays! It was so nice seeing you at ASPPA this year.

Likewise

I don't think there has to be a minimum salary to be on the payroll and the one just needs to be an employee of the other, and really, I thought the criteria was either an employee or some involvement running the business - but being an employee and getting a W2 is likely an easier documentation.