Retirement Plan Control Group
Looking for guidance on whether 2 entities result in a control group that would qualify the employees of one company to be eligible to participate in the 401k & PS plan of another company.
The 1st is a financial services company. It is the owner and a full-time employee.
2nd company is a small food & coffee shop.
Both business are owned 100% by the same owner of the financial services company and retail shop.
The owner is actively engaged in the financial firm and has a manager for the retail shop.
The goal was to set-up a 401k & PS plan for the financial firm so the owner and employee could max out their 401k and have access to profit sharing contributions.
Are these 2 entities, engage in very separate and unique businesses still considered part of a Controlled Group?
Thanks!
Permalink Submitted by David Mertz on Thu, 2017-09-14 20:35
It’s all about common control. The fact that these are different types of businesses is irrelevant. Since the same individual owns 100% of each of the businesses, these businesses constitute a brother-sister controlled group and all employees of these two businesses must be treated as employed by a single employer for the purpose of establishing a retirement plan. In other words, the eligible employees of the food and coffee shop must be included in any plan that covers the owner and the employee of the financial services firm (and vice versa).