What is a affiliated service group?

An affiliated service group is an entity (incorporated or unincorporated) that is either a service or management-type group (see below). It consists of a First Service Organization (“FSO”) plus an ‘A organization’, a ‘B organization’ or, A and B organizations.

Is an affiliated service group a controlled group?

Affiliated Service Group rules were added to the IRS regulations in the 1980s as part of the existing Controlled group rules (Code §414(m)). These rules are incorporated in ERISA law so that employers cannot use multiple corporations or business entities to escape coverage or nondiscrimination rules of qualified plans.

What is Section 414 of the Internal Revenue Code?

in any case in which the employer maintains a plan which is not the plan maintained by a predecessor employer, service for such predecessor shall, to the extent provided in regulations prescribed by the Secretary, be treated as service for the employer.

What is an affiliated employer?

Affiliated Employer means any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which includes the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Code Section 414(c)) with the Employer; any organization ( …

What is considered common ownership?

Common Ownership: The same five or fewer individuals must own 80% or more of each company under consideration; and. Identical Ownership: The same five or fewer individuals from the previous step have identical ownership of more than 50%.

What are organizational attribution rules?

Attribution rules mark out the legal principal owners of a firm, and are in place to prevent tax evasion or fraud. These rules establish that stock owned, directly or indirectly, by or for a partnership shall be considered as owned by any partner having an interest of 5 percent or more in either the capital or profits.

How do you calculate common ownership?

Use this equation: company 1 + company 2 + company 3 = number of full-time equivalents for purposes of determining if each company is subject to ACA pay or play rules.

What is a control group erisa?

The controlled group rules identify whether two or more corporations and certain other groups of related trades or businesses are treated as if they were one employer under many provisions of ERISA and the IRC applicable to employee benefit plans. …

How is control group status determined?

There are two requirements for these kinds of businesses to qualify as a controlled group: First, a group of five or fewer must own at least 80% of the companies, and second, considering the extent to which ownership is identical among each company, the same group owns at least 50% of each company.

What are brother-sister corporations?

A brother-sister controlled group is a group of two or more corporations, in which five or fewer common owners (a common owner must be an individual, a trust, or an estate) own directly or indirectly a controlling interest of each group and have “effective control”.

What is a controlled ownership?

A controlled group is any two or more corporations connected through stock ownership in any of the following ways: Parent-subsidiary group. 80% of stock of each (subsidiary) corporation is owned by another member of the group. Parent corporation must own 80% of the stock of at least one of the other members of the …

What are the rules of attribution?

Who are the employees of an affiliated service group?

Sec. 414 (m) provides in relevant part that, for purposes of most employee benefit requirements, all employees of the members of an affiliated service group shall be treated as employed by a single employer. An affiliated service group is a group consisting of a first service organization (FSO) and: 1.

What does controlled group in 414 ( B ) mean?

414(b) covers controlled group consisting of corporations and defines a controlled group as a combination of two or more corporations that are under common control within the meaning of section 1563(a).

How is constructive ownership determined in an affiliated service group?

Constructive Ownership In determining ownership for purposes of the affiliated service group rules, the complex aggregation rules of Code section 318 apply. Under these rules, an individual is considered to own stock owned by his spouse, children, grandchildren and parents.

What does ” organization ” mean in Sec 414?

“Organization” refers to a corporation, partnership, or other organization—including sole proprietorships, disregarded single – member LLCs, and activities reported on Schedule E, Supplemental Income and Loss (see Sec. 414 (m)).

What is a affiliated service group? An affiliated service group is an entity (incorporated or unincorporated) that is either a service or management-type group (see below). It consists of a First Service Organization (“FSO”) plus an ‘A organization’, a ‘B organization’ or, A and B organizations. Is an affiliated service group a controlled group? Affiliated…