Sacramento 916-357-5660 | Los Angeles 310-571-8896 | San Jose 408-467-3860

Health & Welfare Blog

Employee Aggregation Rules: What You Don't Know Can Hurt You

[fa icon="calendar"] Jun 29, 2015 8:59:00 AM / by Ken Ruthenberg

Ken Ruthenberg

First In A Series

It was not a dark and stormy night--at least it didn't start out that way. Instead, it was a sunny and calm afternoon, and a routine year-end review meeting was taking place between the owners of SMALLCO (a manufacturing business), their accountant and their retirement plan third party administrator (TPA). And then it happened. The accountant made a remark to the business owners about their other business, SMALL Vineyards (a small winery), and the TPA asked, with great surprise in her voice, "What winery?" 

As the sunny and calm afternoon meeting dragged on into the dark and stormy night, the TPA explained how SMALLCO's retirement plan's failure to cover the winery's employees could (remember that word--COULD) disqualify the plan because of Internal Revenue Code (Code) rules that require the aggregation of employers and employees for employee benefit plan purposes. The TPA chastised the business owners for not mentioning the winery to the TPA. Then, the business owners blamed the TPA for not asking the right questions. Finally, they all blamed the accountant for not recognizing the problem. He responded that he didn't think it mattered because the two businesses had nothing to do with one another. A good time was had by none.

An uncommon scene? Nooooooo. In fact, over the years, we have watched with amazement as business owners and their advisors are either shocked to find out about these employer/ employee aggregation rules or that they are subject to them.

Interested in learning more about employer/ employee aggregation rules? Please fill out the form on this page to access the full article. 

Ken Ruthenberg

Written by Ken Ruthenberg