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Question 86: My client "leases" all his staff from a PEO. I know from your other Q&As that they would likely be regarded as his employees, but how do I report them on the Form 5500? Incidentally, the plan has a two year eligibility requirement; whether these workers are leased employees or common law employees, none of them would qualify this year. The only participants are the owner and his wife. The plan has $125,000 in assets. | ||
Answer: You're in luck. It looks like you can file form 5500-EZ.
So, if you are willing to admit they're actually common law employees of the recipient, then they cannot be leased employees as defined in the Code. As such, the plan can go ahead and file a 5500-EZ. Remember, too, that a worker must perform services for a recipient on a substantially full-time basis (generally 1,500 hours per year) for 12 months before he or she becomes a "leased employee" within the meaning of the Code. Thus, a business can lease short-term replacement helpers from a temporary agency without the helpers being treated as leased employees unless and until they satisfy this substantially full-time requirement. Just for fun, let's assume that the workers are truly leased employees (and not common law employees of your client). What does this do to your filing requirements?
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Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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