Leased Employees

[TPA Bob]

A question has come up regarding service for eligibility. We use the Corbel Volume Submitter 401(k) Plan.

Assume eligibility for making deferrals is 90 days and for receiving employer contributions is one year.

Person is hired through an employment agency and works for 90 days. On the 91st day the person is hired by the Employer and is no longer employed throught the employment agency.

The question (of course) is the first 90 days of service through the employment agency counted towards the 90 days of service. I have always taken the position that it does, but now in reading the document again it appears that a leased employee is only treated as an employee of recepient organization after one year of continuous employment with the employer. As this person only has 90 days, do I exclude this service for eligibility purposes?

[ETA Consulting LLC]

No, unless there is a provision specifically recognizing predecessor service for the leasing organization. So, it becomes a choice to the plan sponsor whether to bring them in immediately, but (as you stated) nothing required by statute to bring them in.

Good Luck!