Chapter 1 - Leased Employees

Contributions provided to leased employees under a recipient employer’s plan can be taken into account when performing compliance testing for the leasing organization’s plan.

A multiple employer plan, sponsored by the leasing organization, may include all the leasing organization’s recipients.

Substantially full-time service means 1,500 hours in a 12-month period (or 75% of the customary hours in that job position, if less).

When a common law employee becomes a leased employee there is no severance from employment.

Whether the recipient has the right to hire or fire an individual is a relevant factor in the primary direction or control test in determining whether the individual is a leased employee.

Both a multiple employer plan sponsored by a leasing organization and a single-employer plan sponsored by a recipient would aggregate contributions from both the leasing organization and the recipient for computing the IRC §415 limit.

Years of service with both the leasing organization and the recipient are aggregated if they both are participating employers in the same multiple employer plan.

Years of service with both the leasing organization, during which the employee is leased to the recipient, and with the recipient are aggregated if the recipient maintains a single-employer plan and the individual meet the leased employee requirements with respect to the recipient.

The leased employee is included in the recipient and the leasing organizations single-employer plans for HCE determination.

A multiple employer plan, sponsored by the leasing organization, must perform coverage testing separately for the leasing organization and the recipient.

All of the following are conditions for an individual to be considered a leased employee, EXCEPT:

Which of the following statements regarding the treatment of leased employees in the recipient’s plan is/are TRUE? I. They are treated as employees for purposes of applying the nondiscrimination tests under IRC §§401(a)(4), 401(k) and 401(m). II. They are treated as employees for purposes of determining who are HCEs. III. They may not participate in an employee stock ownership plan (ESOP).

Which of the following statements regarding the leasing organization’s multiple employer plan is/are TRUE? I. Only one Form 5500 is filed regardless of the number of recipients participating. II. Contributions from both the leasing organization and the participating recipients are aggregated to determine the IRC §415 limit. III. Contributions made by the leasing organization and the participating recipients are aggregated then prorated, based on the number of leased employees, to the organization for deduction purposes.

All of the following are relevant factors in determining if the recipient has primary direction or control over services of a leased employee, EXCEPT:

All of the following are requirements of a safe harbor plan adopted by a leasing organization are TRUE, EXCEPT: