Control Groups Flashcards
What is a controlled group?
Businesses that share common ownership = control group relationship
Companies under a controlled group must be treated as one company for purposes of the plan
How do I know if it is a control group?
- Same group of 5 or fewer owners
- That own multiple biz entities
- With controlling interest and effective control (math test)
Attribution Rules for Controlled Groups
Ownership is determined by direct ownership as well as family and spousal attribution
Control Groups
What are the consequences of failing to comply?
Failure to offer plan to eligible EEs is an operational failure of the plan and could lead to disqualification
What must employees of other biz (without plan) be offered?
Same Benefits, Rights and Features afforded the employees of the other business
EEs of other biz must be included in the census
Control Groups
What is the math test for controlling interest and effective control?
Same group of 5 or fewer owners with:
80% Controlling Interest
50% Effective Control
NEVER seen where passed the 80% rule test & flunked 50% test
Who has attribution?
- Husband & Wife interest are attributed to each other (if they both own it together)
- Parent & Child attributed to each other
- Grandparent & grandchild attributed to each other
- Siblings NOT attributed to each other
Why are AOBs important when it comes to control groups?
Another Bussiness Owned (AOB) important even if it is owned by spouse becuase attribution rules could make those employees part of a controlled group
