Defined Benefit & Related Party ?s

[cjs]

I own an 100% of S Corp with employees.
I own 100% C Corp with only my 45 year old daughter as a W2 @ $40,000.
My C gets all income from my S.
My daughter works mostly as a consultant between C to S. She is a hard worker, single mom with 5 children.
I would like to set up a Defined Benefit Pension Plan for her.

QUERY: Are the non discrimination rules and related party rules going to interact in a manner to allow or prevent me for doing this transaction for her.

[ATSMAN]

I own an 100% of S Corp with employees.
I own 100% C Corp with only my 45 year old daughter as a W2 @ $40,000.
My C gets all income from my S.
My daughter works mostly as a consultant between C to S. She is a hard worker, single mom with 5 children.
I would like to set up a Defined Benefit Pension Plan for her.

QUERY: Are the non discrimination rules and related party rules going to interact in a manner to allow or prevent me for doing this transaction for her.

Non discrimination rules require that all employees of S and C to be included in the discrimination testing. So in effect you could NOT exclude employees of S who meet the age and service requirements of your DB plan document.

There is a reason why Congress enacted these laws. Otherwise owners would only cover themselves and their immediate families!

[Snaggletooth]

S Corp Shareholder?

My C gets all income from my S.

Sir, I think we have more fundamental problems.

If the C Corp is receiving ANY income from the S Corp, that means your C Corp is a shareholder of the S Corp. Under the definition of an S Corp, this is disallowed.