leased employees and compensation

[M Norton]

Money purchase plan has single entry date.  If someone meets eligibility during the year, they become eligible as of the beginning of the plan year. 

Plan sponsor uses a temp agency to "test drive" workers.  If they like a worker, they hire them after 3 or 6 months.  Once hired as a regular employee and no longer temp, So it is possible for a worker to meet eligibility during the plan year and have worked as a temp for part of that plan year. 

The question is how to calculate the contribution for a participant who was a temp worker for part of the year.  Do you have to get the compensation paid by the temp agency for that period?  Or do you just use the compensation paid by the plan sponsor from the date the worker became a regular employee?

 

[ETA Consulting LLC]

Unless the plan is designed to count service for the temp, then you'd count only their date of hire for the plan sponsor (the date they actually leave the temp agency to work for the plan sponsor).

Now, once any of these employees work for the plan sponsor on 'substantially a full-time basis' for 12 months, then they are defined as 'Lease Employees' and you must begin to account for them.  Until they meet the definition of 'Leased Employees' (or until they are actually hired on by the plan sponsor), they will be treated like employees of the temp agency.

Good Luck!

[ESOP Guy]

This is a very complex topic. 

Here is another resource.

https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer&n=20

it isn't just comp.  You at times have to look at their hours for vesting.  (See the 2nd person in his example)  If you can find any other material by Darrin Watson on whose is the employer he does a great job of explaining all the nuances and pitfalls.  If this is going to be a regular issue in your firm they should sprint for one of Darrin's webinars on this topic. 

The firm I work for has people listen to his webinars on this topic on a regular basis and we keep his PowerPoint slides handy. 

Full disclosure after that commercial for Darrin I am not paid any commission by him.  I just find this topic rather hard. 

[Larry Starr]

On 10/2/2018 at 11:57 AM, ESOP Guy said:

This is a very complex topic. 

Here is another resource.

https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer&n=20

it isn't just comp.  You at times have to look at their hours for vesting.  (See the 2nd person in his example)  If you can find any other material by Darrin Watson on whose is the employer he does a great job of explaining all the nuances and pitfalls.  If this is going to be a regular issue in your firm they should sprint for one of Darrin's webinars on this topic. 

The firm I work for has people listen to his webinars on this topic on a regular basis and we keep his PowerPoint slides handy. 

Full disclosure after that commercial for Darrin I am not paid any commission by him.  I just find this topic rather hard. 

It's Derrin Watson, not Darrin (just FWIW). Otherwise, endorse 100%.