The existence of a control group is important in a variety of benefit concerns. From retirement plans to welfare plans, and particularly in withdrawal liability matters, establishing whether companies are under common control is very important. Under the Affordable Care Act, it matters for determining whether you are an applicable large employer. So as we get closer to that Jan. 1, 2015, deadline, lets revisit control group rules.
Basically there are two types of control groups. The first is a parent-subsidiary control group. In this relationship, 80% of the stock of each corporation, (except the common parent) is owned by one or more corporations in the group; and the parent corporation must own 80% of at least one other corporation. The second type is a brother-sister control group. It is a little more complex. A brother-sister controlled group is a group of two or more corporations in which five or fewer common owners own directly or indirectly a controlling interest of each group and have effective control. The first part, the controlling interest, means that the group holds 80% or more of the stock of each corporation (but only if such common owner own stock in each corporation). Effective control means more than 50% of the stock of each corporation, but only to the extent such stock ownership is identical with respect to such corporation.
