![]() One more benefit of having a controlled group is that you have more investment opportunities. Having a controlled group can also maximize startup credits available to some small businesses. The fees can add up quickly with just one plan. The Benefits Are Numerous for Controlled Group Sponsorsīesides providing a single 401(k) plan for employees of different companies, plan sponsors will likely save costs by having a controlled group. ![]() The rules are different depending on the age of the family member and relationship with the plan sponsor. Close family members (parents, spouses, children, and grandchildren) might be considered part of a controlled group. Attributed ownership controlled group.Groups which have either subsidiary-parent or sibling controlled groups (multiple) AND a common company in at least two of those groups may form a combined controlled group. Either two (and only two) owners must own at least 50 percent of each company in the controlled group OR no more than five owners must own at least 80 percent of companies within each group. Common owners can band together to make a controlled group if they own enough of each company. Arguably the simplest, the parent company may offer the same 401(k) plan to employees of a subsidiary company as long as the parent company owns at least 80 percent of the subsidiary. However, one of four tests must be satisfied for a proper controlled group. This tool can make life simpler for plan sponsors. This collection of associated companies is called a controlled group under IRS rules. ![]() If, however, the associated companies pass one of four complex ownership tests, the owner(s) may offer all employees the same 401(k) plan. ![]() Entrepreneurs with controlling or significant ownership interests in more than one company or trade might have a difficult time keeping track of the 401(k) plan for each business. Employers that match 401(k) contributions by employees often have an easier time hiring and retaining key talent. ![]()
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