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Who's the Employer?

Question 276: What are the functions of management? Answer: For several years I've written this Q&A column. I receive many questions from practitioners dealing with the topic of this column: employer and employee issues relating to qualified plans. From time to time, however, I receive questions that have absolutely nothing to do with employer and employee issues relating to qualified plans-- such as the question above. It's the most frequently asked question I receive! The question is asked the same way every time. Exact same words. Year after year. I had two people ask the question last night. And so the only thing I can conclude is that the question comes from some college course, and these are students who are looking for help with their homework. Here's a similar example which came in recently: "How does tax control, tax free issues, tax deductions, and tax credits affect investing?" Having given the matter due reflection, I've decided not to be a homework resource for all comers with Internet access. I think I'd rather answer questions that deal with the topic of my column. But for those really interested in management functions, take a look at http://www.ag.ohio-state.edu/~mgtexcel/Function.html. Or, for a somewhat different outlook, you might try www.dilbert.com! Actually, the Ohio State page is relevant for this column's intended audience of retirement plan professionals. The key to a management function group is an organization which, as its principal business purpose, provides management functions for one other organization, or one organization and other organizations related to it. (Code 414(m)(5).) Unfortunately there's no Internal Revenue Code definition of a "management function." Nor is there a regulatory definition. Nor are there any reported cases under Code 414(m)(5). I've long said that a management function is what a manager does: hire, fire, set policies, supervise, receive stock options, etc. The website to which I've referred describes 5 specific management functions: planning, organizing, staffing, directing, and controlling. There are examples of each. I submit that's a fairly good list of "what a manager does." Class is over.

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