Bates & Company
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Trucker Huss, A Professional Corporation
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Compass Retirement Consulting Group, Inc.
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Central Pension Fund of the IUOE
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Carpenter Morse Group
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Central Pension Fund of the IUOE
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Retirement Plan Legal Specialist Pentegra
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Prime Pensions, Inc.
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Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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Nicholas Pension Consultants
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Nova 401(k) Associates
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United 401(k) Plans, Inc.
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Retirement, LLC
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Question 251: A company recently started utilizing a PEO. It had a 401(k) plan in place when the relationship with the PEO began. The plan excludes leased employees. Should it be amended to "not" exclude leased employees, due to the relationship with the PEO? | ||
Answer: Let's go back to the fundamental question, "Who's the Employer?" With that answer, we can provide a framework that will let you answer your question. I will be referring throughout to my book, Who's the Employer?. (Subscribers can click to view online the text of those questions.)
Why is the status of the worker important here? It matters for several reasons.
So, now we get to your question. Should you exclude these workers or not. As I've already suggested, you may not be able to exclude them, or at least not all of them, under 410(b). If the Code allows you to exclude them, should you? Obviously, you save money if you do exclude them. Just as obviously, the productivity and loyalty benefits that a qualified plan provide are unavailable to you if you do exclude them. At that point, the matter is a business decision. |
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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