SECURE 2.0 Act – Section 315. Reforms Family Attribution Rules

SECURE 2.0 Act – Section 315. Reform of Family Attribution Rule

When two or more businesses are part of a controlled group, then the controlled group members are treated as a single employer when applying certain employee benefit plan requirements under the Internal Revenue Code (IRC).

Similarly, two or more employers who are members of an affiliated service group under the IRC are treated as a single employer for the purposes of satisfying controlled group requirements.

These “aggregation” rules are generally based on the extent of common ownership of the businesses; the analysis can be complex for individuals with interests in multiple trades or businesses. 

When determining the level of common ownership in a business, the tax laws have certain rules of attribution whereby an individual is deemed to own stock held by other individuals or entities. Section 315 of the SECURE 2.0 Act (SECURE 2.0) updates a few of those stock attribution rules.

One change addresses the unequal treatment of spouses with separate businesses residing in a community property state compared to spouses with separate businesses residing in a separate property state. Essentially, the new rules provide that “community property laws shall be disregarded for purposes of determining ownership.” 

The second update modifies the rules regarding the attribution of stock between parents with separate and unrelated business and their minor children.

These changes are meant to aid businesses owned by each spouse independently to provide benefits to respective employees. 

The amendments made by this section will apply to plan years beginning after December 31, 2023. 

If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at [email protected].

This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.

About SECURE 2.0

SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.

This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.

The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.

About Schneider Downs Retirement Solutions

Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. 

Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.