Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Senior Plan Administrator

Atlantic Pension Services Inc
(Remote / Kennett Square PA / DE / MD / NJ)

Atlantic Pension Services Inc logo

Quality Assurance Manager

Nova 401(k) Associates
(Remote)

Nova 401(k) Associates logo

Retirement Plan Analyst/Administrator

Compensation Strategies Group, Ltd.
(Remote / Beaumont TX)

Compensation Strategies Group, Ltd. logo

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote / Corona CA / Rancho Cordova CA)

Nicholas Pension Consultants logo

ERISA Counsel

Human Interest
(Remote)

Human Interest logo

Plan Compliance Analyst (Administrator)

RPA
(Remote)

RPA logo

Retirement Plan Quality Assurance

ERISA Services, Inc.
(Remote / Knoxville TN)

ERISA Services, Inc. logo

Pension Administrator

Creative Pension Consultants, Inc.
(Remote / Albany NY)

Creative Pension Consultants, Inc. logo

Retirement Plan Relationship Manager/Consultant

The Retirement Plan Company (TRPC)/an ABG firm
(Remote)

The Retirement Plan Company (TRPC)/an ABG firm logo

View More Employee Benefits Jobs

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Shared Employees

(Posted August 22, 2000)

Question 56: If Dentist Able and Dentist Baker are each sole proprietors, operating in the same office and sharing the staff employees 50/50, can each have his or her own retirement plan, taking into account just his or her share of the staff employees' payroll and hours worked? Please assume there is no entity combining the two sole proprietorships.

Answer: This is a fairly classic shared employee situation. I discuss this at length in Chapter 5 of my book, Who's the Employer?, but here's a quick summary.

The staff members in a shared employee situation, according to some old revenue rulings, work for both dentists. Each dentist must credit each employee with his or her full hours of service. In other words, the receptionist is working 2,000 hours/year for Dentist Able and 2,000 hours/year for Dentist Baker. This position is supported by general common law principles and by reality.

Each dentist credits each employee with the dentist's pro rata share of the employee's compensation. So, each dentist is deemed to have paid the employee half of the employee's salary.

Suppose I'm a billing clerk working there. I work 1,800 hours a year and make $24,000. Able has a 15% profit sharing plan and Baker has a 10% money purchase pension plan. At 1,800 hours, I meet the eligibility requirements for both plans easily. A will put away $1,800 for me, and B will contribute $1,200.


Important notice:

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.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2022 BenefitsLink.com, Inc.