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.
Under the IRS’ controlled group rules, two or more employers with common ownership are considered a single employer for purposes of 401(k) nondiscrimination testing. These rules often obligate all members of a controlled group to cover their employees with the same 401(k) plan in order to pass annual coverage testing. It’s very important to pass coverage testing each year – failing can mean plan disqualification by the IRS – so making an accurate controlled group determination, and covering the necessary number of employees within that group, is essential for every 401(k) plan.