Working with Couples

Dedicated DB works with couples who are equal earners and other couples with one spouse in a supporting role. Frequently, their objective is to maximize the total benefit to the couple. They may be able to adjust how compensation is allocated in order to get the results they want. We can work with you, trying alternative scenarios to maximize contributions, tax deductibility and total income in retirement.

In community property states, even separate businesses of two spouses are generally considered under common control. Each spouse is attributed the other spouse's ownership in a company, so, in effect, each individual owns 100% of their spouse's business as well as 100% of their own business. This constitutes a "controlled group" of companies, which means for plan purposes they are considered together as if there were only one company. For example, if both spouses are doctors but have separate private practices, Dedicated DB's plan document requires that both businesses be covered under a single plan. The community property states are:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

Another consideration is the presence of children under the age of 21. Whether or not the family lives in a community property state, if there is a minor child, the child is attributed ownership of each of the parentıs businesses and it is considered a controlled group. The defined benefit plan will then include both businesses.

If the spouses participate in any way in each other's businesses, the two companies constitute a Controlled Group no matter what state the business is in.

If the couple is divorced or legally separated, they are no longer considered a controlled group for retirement plans.