The Frugal Fiduciary Small Business 401(k) Blog
Get the latest industry news, deadlines and tips you need to know to help tackle your fiduciary responsibility needs.
When two or more companies with common ownership meet the IRS’ controlled group definition, they are considered a single employer for 401(k) plan purposes. 401(k) plans must often benefit the employees of all controlled group members to pass the IRC section 410(b) “coverage” test annually. Put differently - overlooking a member can often mean a failed coverage test. Steep IRS penalties - including plan disqualification - are possible when a failure goes uncorrected for years. A basic understanding of the controlled group rules can help employers avoid this trouble.