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Part 1 · Chapter 1

Controlled Groups and Affiliated Service Groups (§414(b)/(c)/(m)/(o))

Law stated as of October 3, 2026 · Controlled Groups and Affiliated Service Groups

Scope and status

This chapter explains when separate businesses are treated as a single employer under the controlled-group and affiliated-service-group rules of Code §414(b), (c), (m), and (o), and what follows from that treatment. The controlled-group rules are long settled (the §1563 and §414(c) regulations, recently modernized by T.D. 10018). The affiliated-service-group rules remain on 1983 proposed regulations, and no new guidance has issued: the long-term §414(m) regulation project was last listed in the Spring 2025 Unified Agenda, and §414(m) is not on the 2026–2027 Priority Guidance Plan. Confirm that status, and the indexed limits that depend on aggregation, before relying on them.

Citations are to primary authority: Code §§414(b), (c), (m), (n), (o), (r), 1563, 318, 267, and 52; the §1.414(c) and §1.1563 final regulations; and the 1983 proposed §1.414(m) regulations. Two disciplines govern every analysis: (1) build the ownership and relationship matrix first (A2); and (2) never mix attribution systems — §1563 for controlled groups, §318 for affiliated service groups, and §267 for management-function and related-party questions (A3). Part E summarizes the consequences of aggregation for testing, limits, and other regimes, with references to the Parts that treat each in full.

Sections

Part A is shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Framework and the Single-Employer Concept

A1.The aggregation regimes and what "single employer" means

Part 1, ch. 1, § A1

For most qualified-plan and employee-benefit rules, the entities in a controlled group (§414(b) corporations / §414(c) trades or businesses under common control) or an affiliated service group (§414(m)) are treated as a single employer, so their employees are aggregated for §410(a)/(b) eligibility and coverage, §401(a)(4), §401(a)(26), §415, §416 top-heavy, §414(q) HCE, §401(a)(17), ADP/ACP, and elective-deferral/catch-up purposes. Statute: Code §§414(b), (c), (m); Final reg: Treas. Reg. §1.414(c)-1. §414(n) aggregates leased employees; §414(o) is anti-abuse backstop authority; §414(r) QSLOBs are a limited testing tool that does not undo controlled-group or ASG status.

A2.Build the ownership and relationship matrix first

Part 1, ch. 1, § A2

Before any legal conclusion, assemble a year-by-year matrix of every entity, its legal form and tax classification, direct ownership, constructive ownership and its attribution source, and all family, trust, estate, option, warrant, convertible-instrument, voting, and buy-sell arrangements, plus the service relationships among entities. Practitioner consensus; IRS Pub. 7005 (ASG Worksheet).

A3.Do not mix attribution systems

Part 1, ch. 1, § A3

Ownership is attributed under different systems depending on the regime: §1563 attribution for controlled groups (§414(b)) and the parallel §1.414(c)-4 constructive-ownership rules for common control (§414(c)); §318 attribution for ASG ownership (§414(m)(6)(B)) and for HCE/key-employee status; and §267 related-party concepts for management-function and related contexts. Statute: Code §§1563, 318, 267; Final reg.

Part B — Controlled Groups and Common Control (§414(b)/(c))

  1. B1Parent-subsidiary groupSubscribers
  2. B2Brother-sister group — the two-prong test (and the Vogel same-persons rule)Subscribers
  3. B3Combined groupSubscribers
  4. B4§1563 attribution and the §414(c) constructive-ownership rulesSubscribers
  5. B5Common control for non-corporate and mixed entity groups; excluded interestsSubscribers
  6. B6Tax-exempt, governmental, and church organizationsSubscribers

Part C — Affiliated Service Groups (§414(m)) — Proposed-Regulation Status

  1. C1The ASG concept and its regulatory postureSubscribers
  2. C2First service organization / service organizationSubscribers
  3. C3A-Organization ASGSubscribers
  4. C4B-Organization ASGSubscribers
  5. C5Management-function affiliated service groupSubscribers
  6. C6§318 attribution and overlapping ASGsSubscribers

Part D — Anti-Abuse, Leased Employees, and QSLOBs

  1. D1§414(o) anti-avoidance, §414(n) leased employees, and §414(r) QSLOBsSubscribers

Part E — Downstream Consequences

  1. E1Qualified-plan testing and limitsSubscribers
  2. E2MEP/PEP, welfare/ACA, and Title IV consequencesSubscribers

Part F — Retroactive Exposure and Correction

  1. F1Year-by-year exposure and the correction routesSubscribers

Worked examples

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.

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