Message Boards Digest

August 30, 2022

Here are the most recently added topics on the BenefitsLink Message Boards:

EBECatty created a topic in 401(k) Plans

Attribution of Son-in-Law's Ownership Interest in Another Employer

"Would appreciate a quick sanity check here: Mother owns 70% of Corp A. Mother has an adult daughter, who is married to son-in-law. Son-in-law owns the other 30% of Corp A. Son-in-law also owns 100% of Corp B. (Assume no other attribution aside from family, no excluded interests, no ASG, no management group, not a community property state.)

Under 1563, I believe that mother will not be deemed to own any stock in Corp B. Daughter would be deemed to own all 100% of son-in-law's stock in Corp B, but because daughter is an adult, and mother does not own >50% of Corp B, mother is not deemed to own daughter's (attributed) stock in Corp B. Also, the prohibition on double-attribution among family members would cut off deemed ownership of those shares with daughter (i.e., once they are attributed from son-in-law to daughter by spousal attribution, they cannot be attributed again to mother, even if mother did own >50% of Corp B).

Likewise, as an adult, daughter would not be deemed to own mother's shares in Corp A because daughter does not own >50% of Corp A's shares.

Because mother owns >50% of Corp A, she would be deemed to own any shares in Corp A owned by daughter directly (zero); however, the double-attribution rule would prevent attribution from son-in-law to wife to mother, so mother would not be deemed to own son-in-law's 30% in Corp A.

I think I'm left with:

Corp A: 70% mother; 30% son-in-law; same 30% daughter through spousal attribution

Corp B: 100% son-in-law; same 100% daughter through spousal attribution; 0% mother

This leaves only 30% common ownership, which clearly avoids a controlled group. Agree?"

2 replies so far   |    Click Here to Add a Reply

Dobber created a topic in 401(k) Plans

Vesting Schedule Moved from 100% to Graded When Solo 401(k) Amended to SH 401(k)

"Sole proprietor established a Solo 401k a few years ago. All was well because he had no employees. In February 2021, a FT employee was hired. Unfortunately the plan had both immediate eligibility and vesting in profit sharing contributions. In May 2021, the owner amended the plan to be a safe harbor 401k and added a vesting schedule for profit sharing contributions with an effective date of 1/1/2021. Since then, the sole full-time employee has severed employment. Is the former employee fully vested?"

3 replies so far   |    Click Here to Add a Reply

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