We have a client who is a US corporation, with a foreign subsidiary. Must the foreign subsidiary be covered by the SIMPLE-IRA of the US Corporation due to being part of a control group?

The subsidiary employees a couple of US Citizens who earn both US and Foreign source income. Must they cover none, US Only, or both sources of income?


Are any of the coverage choices optional or is it requried?

Thanks!
Andrea

Code Sections 408(k)(2)© [SEPs] and 408(p)(4)(B) [SIMPLE IRA] allows nonresident aliens that have no US source income to be excluded. Thus, US citizens or residents who work for the parent and nonresidents aliens that have US source income will have to be covered (if otherwise eligible).

See, Derrin Watson, Who's The Employer?, Q 9:10. Who's the Employer-LINK