Special rules for separate line of business
(1) In general
(1)In general#
For purposes of sections 129(d)(8) and 410(b), an employer shall be treated as operating separate lines of business during any year if the employer for bona fide business reasons operates separate lines of business.
(2)Line of business must have 50 employees, etc.#
A line of business shall not be treated as separate under paragraph (1) unless—
(A) such line of business has at least 50 employees who are not excluded under subsection (q)(5),
(B) the employer notifies the Secretary that such line of business is being treated as separate for purposes of paragraph (1), and
(C) such line of business meets guidelines prescribed by the Secretary or the employer receives a determination from the Secretary that such line of business may be treated as separate for purposes of paragraph (1).
(2)(A)#
such line of business has at least 50 employees who are not excluded under subsection (q)(5),
(2)(B)#
the employer notifies the Secretary that such line of business is being treated as separate for purposes of paragraph (1), and
(2)(C)#
such line of business meets guidelines prescribed by the Secretary or the employer receives a determination from the Secretary that such line of business may be treated as separate for purposes of paragraph (1).
(3)Safe harbor rule#
(A) In general The requirements of subparagraph (C) of paragraph (2) shall not apply to any line of business if the highly compensated employee percentage with respect to such line of business is— (i) not less than one-half, and (ii) not more than twice, the percentage which highly compensated employees are of all employees of the employer. An employer shall be treated as meeting the requirements of clause (i) if at least 10 percent of all highly compensated employees of the employer perform services solely for such line of business.
(B) Determination may be based on preceding year The requirements of subparagraph (A) shall be treated as met with respect to any line of business if such requirements were met with respect to such line of business for the preceding year and if— (i) no more than a de minimis number of employees were shifted to or from the line of business after the close of the preceding year, or (ii) the employees shifted to or from the line of business after the close of the preceding year contained a substantially proportional number of highly compensated employees.
(3)(A)In general#
The requirements of subparagraph (C) of paragraph (2) shall not apply to any line of business if the highly compensated employee percentage with respect to such line of business is—
(i) not less than one-half, and
(ii) not more than twice,
the percentage which highly compensated employees are of all employees of the employer. An employer shall be treated as meeting the requirements of clause (i) if at least 10 percent of all highly compensated employees of the employer perform services solely for such line of business.
(3)(A)(i)#
(4)Highly compensated employee percentage defined#
For purposes of this subsection, the term “highly compensated employee percentage” means the percentage which highly compensated employees performing services for the line of business are of all employees performing services for the line of business.
(5)Allocation of benefits to line of business#
For purposes of this subsection, benefits which are attributable to services provided to a line of business shall be treated as provided by such line of business.
(6)Headquarters personnel, etc.#
The Secretary shall prescribe rules providing for—
(A) the allocation of headquarters personnel among the lines of business of the employer, and
(B) the treatment of other employees providing services for more than 1 line of business of the employer or not in lines of business meeting the requirements of paragraph (2).
(6)(A)#
the allocation of headquarters personnel among the lines of business of the employer, and
(6)(B)#
the treatment of other employees providing services for more than 1 line of business of the employer or not in lines of business meeting the requirements of paragraph (2).
(7)Separate operating units#
For purposes of this subsection, the term “separate line of business” includes an operating unit in a separate geographic area separately operated for a bona fide business reason.
(8)Affiliated service groups#
This subsection shall not apply in the case of any affiliated service group (within the meaning of section 414(m)).