2018 Year-End Tips – Ownership

OWNERSHIP – How can ownership structure affect a retirement plan?

The ownership structure of a business that sponsors a retirement plan (and other related businesses) can have a significant impact on the compliance testing and reporting for a plan. For this reason, the TSC Year-End Questionnaire includes questions designed to identify the owners of the business sponsoring the plan and to determine if they own or control another business or businesses.

In addition to identifying highly compensated employees and key employees – classifications used in nondiscrimination, coverage, and top-heavy testing, ownership helps to determine whether two or more businesses are part of a controlled or affiliated service group. While that determination is beyond the scope of this article, businesses that are part of a controlled or affiliated service group are treated as though they are employed by the same “employer” for retirement plan purposes.

To help ensure that your plan remains in compliance with applicable rules and regulations, we ask for the following ownership information on an annual basis: A list of all of the owners (including their ownership percent), a list of employees that are related to those owners, information about other entities owned by the owners or by the business that sponsors the plan, and information about the relationship between businesses under common ownership or control.