Prime Benefits
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Manager/Supervisor of Benefits and Payroll Compensation Virginia Farm Bureau
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Southern Pension Services
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Defined Contribution Plan Administrator Pension Investors Corp of Orlando Inc
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Advanced Plan Designs, LLC
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Pension Rights Center
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Carpenter Morse Group
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Howard Simon & Associates
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Small NY Actuarial TPA Firm
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Definiti
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Southern Pension Services
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Question 246: Company A leases approximately 90% of its employees to Company B. Companies A and B are in a controlled group. Company A maintains a 401(k) plan for its employees, including the employees leased to Company B. Does Rev. Proc. 2002-21 apply to this arrangement? | |
Answer: No, I don't think it does, but I surely do wish the IRS had taken the time to define PEO so we had a definitive answer. Because of this implicit assumption, and the difficulties of making a determination of employee status, the relief is crucial. I believe that the risks of ignoring the Rev. Proc. are so great that I have compared them to bungee jumping using only a string. (Q 4:51.)
Incidentally, I will be addressing the Rev. Proc. at two upcoming conferences. The first is ASPA's Los Angeles Benefits Conference, where I should be joined on the podium by Richard Wickersham of the IRS. The second is Corbel's Advanced Pension Conference in Orlando, Feb. 12-14, 2003. At that conference I will also be discussing how to analyze controlled group and affiliated service group situations, as well as new developments in the 401(k) world. |
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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