Who's the employer?

[gregburst]

CompanyX has about 20 full-time employees that it covers in its 401k plan. It also has about 20 part-time employees which have been kept at under 950 hours per year so that they don't ever become plan eligible. CompanyX has recently been it talks with Assante PEO. Assante says it will take the part-timers and make them Assante employees; then they won't be employees of CompanyX, and they'll be able to work over 1000 hours (in CompanyX's service) without becoming eligible for CompanyX's plan (or being factored into its 401b test). Assante might also assign these employees to other companies in order to get them 40 hours per week.

I've done some reading on this, and I find as many questions as answers. Has a definitive answer been given yet by the IRS/DOL? How should CompanyX treat these employees if they are transferred to Assante?

Also, some full-time employees (over 1500 hours) might be transferred to Assante also. Should they be treated differently than the part-timers?

TIA, Greg