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Question 96: John recently turned all his staff over to a leasing company. He did this because the leasing company was able to offer him substantial savings on health insurance. Nothing has changed with the staff except who writes their paychecks. John has previously covered the staff under his qualified plan and wants to continue to do so. Are there any problems with him doing so? |
Answer: Most likely, no. In almost all probability, John is still the common law employer of these workers. Accordingly, they are not his leased employees and they should be treated as he would anyone he employed directly. He can ignore whatever benefits the staffing firm is providing (assuming he is not cosponsoring the plan), because Internal Revenue Code section 414(n) does not apply to his situation. |
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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