Foreigner working in US

[Bird]

We have a company, USA, that is based here. There is a parent company in Germany that has based a German national here for two years. He is really an employee of the German co., but is paid by the US co through what they are calling a shadow payroll - basically, he is added to the USA payroll and the USA co invoices the German co for the wages.

Since he's showing up on the USA payroll, the Q arises as to whether he is eligible for the USA plan. If I had to answer, I'd say "no" because they are just using the USA payroll as a convenience. (I think I've seen related companies that are not necessarily controlled groups using one company as a common paymaster and just because someone shows up on a payroll report doesn't make them an employee.)

Any thoughts?

P.S. He's not a nonresident alien who would be excluded under the plan terms; has too many days of residence.

[masteff]

I worked for 7 years in 401(k) administration at a major oil refiner that is owned by the national oil company of a foreign country. Our parent company would send employees on assignments to the US (several were just flat out spies to make sure we weren't cheating the parent but most were legitimate learning experiences). So, basically identical scenario as yours...

My experience is yes, the foreign employee on the USA payroll participates in the USA plan. Of course, we didn't have the goal of excluding them so certainly never looked for ways to do so.

Keep in mind that because of control group, the employee doesn't terminate until leaving both the USA and the foreign company. We actually had a status code just for such employees so they couldn't take distributions accidentally.