Sr. Retirement Plan Administrator Tycor Benefit Administrators, Inc.
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Sentinel Benefits & Financial Group
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Hessel & Associates, LLC
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Junior Implementation Specialist - 401(k) Administration Ubiquity Retirement + Savings
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Defined Benefit Pension Consultant The Ryding Company
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Retirement, LLC
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Retirement, LLC
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Senior Retirement Plan Administrator Enhanced Retirement Solutions
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NFL Player Benefit Office
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Compliance Analyst - 401(k) Administration Ubiquity Retirement + Savings
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Senior Administrator / Site Manager Nicholas Pension Consultants
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Defined Benefit Plan Consultant Sentinel Benefits & Financial Group
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Senior Actuarial Analyst/ Project Manager Van Iwaarden Associates
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United Benefit Pensions Inc.
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Sentinel Benefits & Financial Group
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Nicholas Pension Consultants
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Manager - Defined Contribution Plans M2B Retirement Consulting LLC
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Question 175: Often client companies of PEOs want to continue to maintain their own 401(k) plans. However, the PEO cannot deduct 401(k) contributions to the client company's plan, because deductions under IRC 404 are limited to plans "maintained by the employer," which is not the PEO. Has the IRS considered this issue? |
Answer: Yes they have. And that's why they wrote Rev. Proc. 2002-21. W-2s and paychecks do not an employer make. It is that fundamental point which caused the IRS to issue Rev. Proc. 2002-21 to allow staffing firms a chance for relief from the misguided consequences of trying to sponsor a single employer plan. No staffing firm should lightly disregard that relief or ignore the warning implicit in it. |
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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