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401k rules for Temp Agencys


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Posted

I have a business that supplies temp employees to other companies. There are 9 out of 30 employees that broker the 1000 hrs in 2003. (all w2 income and the company is a S-corp). I heard that agencies that operate with temp employees have to count them for the testing rules, but don't have to offer the plan to them?

Also, can I still set up a 401k plan w/PS for 2003? or did I miss the boat. Any suggested guidance/ideas are welcome.

Posted

If they really are temp employees (not worksite employee or employees of the clients) they are your employees for testing purposes. You can offer retirement benefits to any employees you want, subject to the eligibility and nondiscrimination rules of the IRC. You missed the boat for 2003. I think that even a SEP has to be in place by year end, but I am sure others will know for sure.

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