What is a Controlled Group?
Overlapping ownership in two or more companies
A controlled group of companies may exist when there is
overlapping ownership in two or more companies. There are
two kinds of controlled groups: a parent-subsidiary
controlled group and a brother-sister controlled group.
A parent-subsidiary controlled group exists when one company
owns 80% or more of a subsidiary. A brother-sister
controlled group exists when 5 or fewer individuals own 80%
or more of two or more companies. In certain cases,
ownership by a spouse, parent, child or grandchild may be
combined to determine whether a controlled group exists.
Companies that are members of a controlled group may be
tested separately if they pass minimum coverage tests. If
they do not pass minimum coverage tests, controlled groups
must be tested together. If a company fails to offer plan
benefits to part of a controlled group and does not pass the
required tests, they must pay mandatory contributions for
the employees who were excluded from the benefits of the
Topical Articles of Interest:
Failed ACP Test
Failed ADP Test
Multiple Use Test
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This page was last reviewed and/or updated
Friday, July 03, 2015 05:22 PM