What is a Combined Group?

A combined group is a group consisting of three or more corporations connected through either parent-subsidiary relationships or brother-sister relationships. Among them, one corporation at least should be the common parent of a brother-sister group and also a member of any parent-subsidiary group.

Example of a Combined Group

Robert owns 80% of the voting stock in Lumber Corporation and Carpet Corporation. In its turn, Carpet Corporation owns 80% of the voting stock in Running Corporation. Lumber and Carpet belong to a brother-sister controlled group while Carpet and Athletic are parts of a parent-subsidiary relationship. Because Carpet acts as a common parent for both groups, Lumber, Carpet, and Athletic form together one consolidated entity.

Why It Is Important

Knowing what combined groups are matters for business owners who want their actions to comply with employee benefit plan regulations. Employees from these corporations are treated as if they were working for one employer which influences how benefits plans have to be organized and conducted.

Being aware of legal requirements concerning combined groups’ rules can help owners manage their employee benefits plans in accordance with the law.