How does multiple sole proprietors impact my plan?

Question:

My wife started a second business. It is a separate entity from her main consulting business for which you guys administer a cash balance plan. Both businesses are single-member LLCs (she is the sole member).

Should the income we provide for determining the cash balance plan contribution range include both businesses or just the business the plan was opened for? There will be a very large loss for the new business this year so I don't know if that might impact what can be contributed into the existing plan. I believe multiple LLCs that have the same ownership can be considered a control group for retirement plans so I just want to better understand how the cash balance plan might be affected.

Answer:

Because your wife has two sole proprietors, she is part of a control group. We would have to combine the income together. If she has a big loss from one entity then she may not be able to contribute.