Common ownership and certain service relationships can require businesses to be treated together for retirement-plan purposes. Separate tax IDs do not settle the question.
Why another business can change the design
A new comparability illustration depends on which employees belong in the testing population. Controlled-group and affiliated-service-group rules can bring employees of related businesses into the analysis. Ownership attribution, including family relationships, can matter.
The right starting point is disclosure: list all relevant entities, owners, ownership percentages and service arrangements. The provider or qualified adviser can then determine how the rules apply.
Example: one owner, two payrolls
Assume a professional owns a practice and a management company, and a qualified review determines they must be considered together. The first census contains only practice employees. The second company has four additional employees, each earning $50,000.
| Population | Compensation | Employer contribution |
|---|---|---|
| Four additional employees | $200,000 total | $10,000 total |
| Each additional employee | $50,000 | $2,500 |
An omitted payroll can materially change the budget. The $10,000 is a simple funding illustration after assumed inclusion, not a determination that every related-company employee must receive 5%.
Ownership is not the only question
Affiliated service group rules can apply to certain service-business relationships even when a simple common-ownership screen does not answer the question. Professional practices with management, staffing or shared-service entities deserve careful review.
Conversely, having a shared address or vendor does not by itself establish that businesses must be aggregated. The actual facts and applicable legal tests control.
What to bring to the review
- An ownership chart for every relevant entity, including family interests.
- The services each entity performs and for whom.
- Employee counts, payrolls and existing retirement plans by entity.
- Recent acquisitions, sales, partner admissions or ownership changes.
Ask for a documented conclusion on the employer group before relying on a final allocation. If the scope changes, the census, coverage tests and contribution proposal may all need to be revisited.
Explore the next step
Try the free scenario calculator with hypothetical inputs, or compare more allocation examples. The methodology guide explains what the calculator does and does not test.
Sources & further reading
- Internal Revenue Code §414: related employers and special rules
- Treasury Regulation §1.410(b)-2: minimum coverage
Educational content updated September 18, 2026. Examples are fictional; they illustrate funding choices and do not constitute final testing or plan-specific advice.