When is a single employer not really a single employer? When it’s a member of a “controlled group” of businesses. Who cares? You should, if you sponsor an employee benefit plan. Why? Because what you don’t know about the controlled group rules—or who is in your corporate “family tree”—can send chaos rippling through the entire enterprise.

Federal law requires that employers within the same “controlled group” of businesses be treated as a single employer for many employee benefit purposes, including discrimination testing. Many executives—particularly those of small, closely held employers—don’t know their employers are members of a controlled group. A distant holding company, venture capitalist, or group of individuals or trusts might own the employer, leaving the executives wholly unaware about who else nests in the corporate tree.

Read the full article: Out of Control.