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EMPLOYEE LEASING WILL NOT RESULT IN THE 'OVER-FUNDING' OF SINGLE EMPLOYEE (RECIPIENT) PLANS

MAR. 23, 1988

EMPLOYEE LEASING WILL NOT RESULT IN THE 'OVER-FUNDING' OF SINGLE EMPLOYEE (RECIPIENT) PLANS

DATED MAR. 23, 1988
DOCUMENT ATTRIBUTES
  • Authors
    Selter, Eric Jay
  • Institutional Authors
    Practice Service Corporation
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    employee benefit plan
    single plan, qualified plan
    leased employee
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 88-3399
  • Tax Analysts Electronic Citation
    88 TNT 73-40

 

=============== SUMMARY ===============

 

Eric Jay Selter, Chief Counsel for Practice Service Corporation, Glendale, Calif., has written Treasury to request that section 401(a)(26) not be added to section 414(n)(3) so that as a matter of law, a recipient's plan would not have to count the leased employees for section 401(a)(26) coverage requirements. Alternatively, Selter requests that a recipient's plan and a leasing company's plan be treated as a single plan for section 401(a)(26) coverage requirements.

In response to concerns expressed by Rosina Barker of House Ways and Means Committee staff, Selter responds by stating that "over- funding" of single (recipient) plans would be difficult if not impossible because of the new minimum funding rule under section 412(c)(7) and penalties for unreasonable actuarial assumptions. Selter further states that the affiliated group services rules of section 414(m) and (o) prevent the potential for a recipient to start his or her own employee leasing company and lease back the employees. Selter suggests that a recipient not be allowed to own (either directly or indirectly) any part of the leasing company. Selter urges Treasury for a definitive statement either in the regulations, legislation, the Blue Book, or in a written response.

DOCUMENT ATTRIBUTES
  • Authors
    Selter, Eric Jay
  • Institutional Authors
    Practice Service Corporation
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    employee benefit plan
    single plan, qualified plan
    leased employee
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 88-3399
  • Tax Analysts Electronic Citation
    88 TNT 73-40
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