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Same desk rule, change of employer, and eligibilty to particpate in 40


Guest danmar

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Guest danmar

An independant broker has been operating as a sole propreitor for 5 years and maintains a Profit Shaing plan with a 2 year eligibility period and no vesting. He currently has no employees because, under the terms of his contract with the brokerage firm he represents, his assistant is considered a "home office" employee, receives a W-2 straight from the brokerage firm and participantes in the brokerage firm's 401k plan and health plans.

Now, the contract between the independant agent and the brokerage firm has been re-negotiated. As a result, his assistant will now be his own employee. His assistant will be working at the same location and doing the same things as before, but will no longer be an employee of the brokerage firm and will not be able to participate in any of the firm's retirement or health plan programs.

Now, this assistant has been working with this broker for several years. Under the same desk rule, my interpretation would be that he would be imediately eligible to particiapte in the broker's PSP as of the effective date of the new contract. Is this correct? Normally, the same desk rule is only applied to qualification for QP distributions, but I found a reference regarding two merged county hospitals that applied the rule to eligibility. Has anyone seen this scenerio play out in real life?

Also, would this conclusion look any different if the broker had sponsored a SEP or SIMPLE instead of a PSP?

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