Controlled group
Certified Financial Planner glossary · Certified Financial Planner
Definition
Businesses under common ownership treated as a single employer for retirement plan coverage and nondiscrimination testing.
Controlled group in plain English
One entrepreneur owns 80% of three small companies and wants a rich plan in only the profitable entity. Controlled-group rules may treat those businesses as a single employer for retirement plan coverage and nondiscrimination testing, so you cannot hide HCEs or exclude rank-and-file by entity games. Brother-sister and parent-subsidiary tests turn on ownership percentages. If the stem scatters employees across related firms, run controlled-group analysis before blessing coverage.
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