Who's the Employer

A Guide to Employee and Aggregation Issues Affecting Qualified Plans

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BenefitsLink Q&A Column

Since 1999, Derrin Watson has authored a column for David Baker's outstanding BenefitsLink web site.  The column is designed to supplement Derrin's book, Who's the Employer.  It deals with the same issues as his book, and has become an important part of the dialog between Derrin and his readers.

Along the way, the column has become the largest column at BenefitsLink.  With close to 200 Q&A's organized chronologically as they were written, it can be difficult to find things.

So, here we organize his questions by topic.  This should make it easy for you to find what you're looking for.  Of course, these are only general discussions on the issues involved, and not substitutes for formal legal advice. Click a topic below to see the list of associated Q&A's:

bulletEntity Status and Self-Employed Individuals
bulletEmployee Status and Independent Contractors
bulletLeased Employees and PEOs (before Rev Proc 2002-21)
bulletRev Proc 2002-21 and PEOs
bulletShared Employees
bulletControlled Groups
bulletControlled Group Attribution
bulletControlled Group Exclusion
bulletBusinesses Under Common Control
bulletTraditional Affiliated Service Groups
bulletASG Attribution
bulletHCE Status
bulletManagement Function Groups
bulletRelated Party Rules
bulletOther Issues

 

Entity Status and Self-Employed Individuals
225 W-2, 1099, or Both?
208 Expense Sharing Arrangements As ASGs
206 Proprietorship as Partner in an Emergency Medical Partnership
181 Self-employed Clergy
155 Effect of IRS Notice 99-6 on Single-Member LLCs Not Taxed As Corporations
154 Single Member LLCs/Limited Partners as Employees
150 Royalties as Earned Income
148 Treatment of LLCs Under the ASG Rules
139 What's an Entity?
107 Partner as Affiliated Service Group Entity
74 LLC Member's Compensation for 401(k) Purposes
65 LLC Member as Employer
 
Employee Status and Independent Contractors
244 Derrin Watson -- Employee or Independent Contractor
243 Foreign Independent Contractor or Employee
239 Incorporated Officer
205 Illegal Aliens and the Supreme Court
197 Independent Contractors on Health Plan
194 Excluding Amish Workers
192 Excluding Workers by Classification
190 Employee to Independent Contractor
189 Commissioned Insurance Sales
155 Effect of IRS Notice 99-6 on Single-Member LLCs Not Taxed As Corporations
154 Single Member LLCs/Limited Partners as Employees
122 Use Of LLCs To Change Employee Status
104 Substantial Presence Test for Residency Status
103 Exclusion of Nonresident Aliens
100 Illegal Aliens As Employees
89 Does an Independent Contractor Agreement Matter?
84 Plan For Independent Contractor Truckers
61 Attendant as Independent Contractor
52 Who's the Employer of an LLC Member?
46 Employee Becomes an Independent Contractor
24 Employee on someone else's payroll
13 Audit Guidelines and Independent Contractors
10 Different Employee Definitions for Different Agencies
   
Leased Employees and PEOs (before Rev Proc 2002-21)
209 Client Termination In PEO Plan
153 Watson's Take on PEO Controversy
142 Leasing Doctors
137 State Law and Professional Employer Organizations
136 Breaks in Service for 414(n)(4)(B) Service
135 Lease to Own and Code Section 414(n)(4)(B)
124 Stock Options and Leased Employees
117 Who Takes the Work Tax Credits If We Use a Staffing Firm?
105 Leased Employees and Self-Employed Medical Reimbursement Plans
99 Avoiding the Substantially Full-Time Rule for Leased Employees
96 Ignoring the Leasing Company
86 Handling "Leased" Employees on 5500 Forms
82 Top Heavy Rules for Plan Covering Leased Executives
68 Owner as Leased Employee
64 401(k) Plans Using Professional Employer Organizations-- Miscellaneous Questions
63 Co-sponsorship of plans
59 Current Status of "Dual Employer" Arrangements for PEOs
48 Employees Working for Franchisor
43 PEO Sponsoring a Cafeteria Plan
42 Combination of leasing company plan and recipient's plan
37 Is a Professional Employer Organization a "co-employer" with its customer companies?
34 LLC and Employee Leasing Firm - How to Cover the LLC members?
20 Hours of Service for Leased Employees
11 Counting Hours in Lease to Own
5 Existing plan with new staffing firm
4 Staffing Firms as Common Law Employers
2 Recipient Offsetting Staffing Firm Contributions
   
Rev Proc 2002-21 and PEOs
246 PEOs and Controlled Groups
232 Management Company Might Be PEO
220 Rev. Proc. 2002-21-- Where Are We Now?
211 No Back Office Employees in PEO Multiple Employer Plan
204 "Safe Harbor" Leased Employee Plans After Rev. Proc. 2002-21
200 Watson's Fixes for Rev. Proc. 2002-21
199 Temp Firms as PEOs
198 Hospital as PEO
196 Testing a PEO Multiple Employer Plan
195 PEOs and Retirement Deductions
193 Handling Assets of a Client Organization's Terminating 401(k) Plan
191 Rev. Proc. 2002-21 and Leased Employees
188 Rev. Proc. 2002-21 and Employee Status
186 Client Organizations and Recipients
185 Temporary Employees Loses Under Rev. Proc. 2002-21
182 Adopting a Single Employer PEO Plan After May 13
179 Is a CO Required to Cosponsor a PEO Multiple Employer Plan Under Rev. Proc. 2002-21?
178 PEOs and Welfare Plans After Rev. Proc. 2002-21
177 Rev. Proc. 2002-21 Deadlines
176 Entering or Leaving a Multiple Employer Plan
175 PEO Client Maintaining Its Own Plan; Why the PEO Likely Isn't the Employer
174 Bootstrapping Employer Status
173 Rev. Proc. 2002-21 Relief For Multiple Employer Plans
172 PEO Plans and Determination Letters
171 Rev. Proc. 2002-21 and the Separate CO Plan
170 PEO Spinoff Plan under Rev. Proc. 2002-21
169 Employee Status in PEO Multiple Employer Plan
168 Multiple Employer PEO Issues
166 Additional Guidance on Rev. Proc. 2002-21
165 Rev. Proc. 2002-21 Transition Rule Revisited; Other Compliance Problems
162 Rev Proc 2002-21; Relief for the Compliant
   
Shared Employees
149 Husband and Wife, Each Practicing Medicine as Sole Proprietors
70 De Minimis Shared Employee
57 Re the Earlier Shared Employees Q&A -- What About the Proposed Regulations?
56 Shared Employees
   
Controlled Groups
246 PEOs and Controlled Groups
245 Most Frequently Asked Controlled Group Question
241 Controlled Groups and Loan Defaults
240 Controlled Groups and Loans
227 Controlled Groups Without Employees
224 Bury Your Controlled Group Problems in Vogel Fertilizer
218 Multiple Employer Plan Involving Controlled Group
215 Change in Status and Top Heavy Minimums
212 EGTRRA and Controlled Groups
180 Over Half Isn't At Least 80%
161 Counting Shareholder
160 Voting Power Creating Controlled Group
141 Consequences of Separate Status for Partnerships; Owner-Employee Rule
132 Foreign Parents of Multilevel Group
125 Filing for Midyear Changes in Controlled Group Status
123 Controlled Groups, Common Control and SEP
121 Dentists as Investors
118 Effect of S Corp Status on Controlled Group Determination
116 Company Splitup
115 Avoiding Controlled Groups By Staying Unincorporated?
106 Testing an Ending Controlled Group
85 Nonprofits and Controlled Groups
81 Overlapping Groups and Options in Family Situations
79 Excluding Employees of Controlled Group Members
73 Does a plan automatically cover employees of an affiliated employer?
66 50% Isn't More Than 50%
53 Controlled group determination for ESOP that covers owner of plan sponsor
51 Transfer of Employment from Fifty Percent Subsidiary to Parent Corporation
45 Wholly-owned subsidiaries of controlled groups
38 Should we treat these two as a controlled group just to be safe?
35 Controlled groups and SIMPLE IRAs
32 I have a foreign parent with subsidiaries in the U.S. and foreign subsidiaries - how many do I include?
31 Overlapping groups
30 Corp and LLCs as Controlled Group
29 What does it mean to be part of a controlled group
28 Parent-Subsidiary Groups
25 Foreign parent of controlled group
22 Qualified plan as shareholder for controlled group
17 Transfer within a controlled group
16 Management function group and controlled group
14 Multiple 75% corporations
12 Separation from Service for Pension Plan in CG Situation
9 Controlled Groups in Marriages Continued
8 Separation from Service in Controlled Group
   
Controlled Group Attribution
242 Multiple Family Attribution
236 Attribution Adds Owners, Not Shares
223 Attribution From Entities Under Different Rules
207 No Sibling Attribution In Controlled Groups
167 Attribution Through Grantor Trust
159 ESOP as Majority Owner
156 Attribution Through Children's Trust
151 Convertible Stock Constituting An Option
149 Husband and Wife, Each Practicing Medicine as Sole Proprietors
131 Marital Attribution Strikes Again!
114 Attribution Arising From a Lien?
113 Community Ownership of Attributed Stock?
101 Parental Attribution
93 Is Attributed Stock Counted Once, or Twice?
92 Triple Attribution In Controlled Group
81 Overlapping Groups and Options in Family Situations
71 Community Property Constituting Direct Ownership
67 Parent-Child Attribution
55 Are rights of first refusal considered "options"?
44 Attribution at age 18 or 21?
41 Repeal of Family Aggregation Does Not Eliminate Controlled Group
39 More on options
26 Using options to create controlled groups
23 Family Attribution
22 Qualified plan as shareholder for controlled group
18 Can Options Break Up Controlled Groups?
15 Parent child attribution rules
9 Controlled Groups in Marriages Continued
7 Attribution from Options Granted by Corporation
3 Parent Child Attribution and family aggregation
   
Controlled Group Exclusion
222 Employee for Exclusion Rules
159 ESOP as Majority Owner
158 Exclusion of ESOP Stock
143 Excluding ESOP Stock
55 Are rights of first refusal considered "options"?
   
Businesses Under Common Control
235 What's a Trade or Business Under IRC 414(c)?
230 Common Control in Partnerships
214 Domestic and Business Not Aggregated
202 Are Sole Proprietorship and 60%-Owned Corporation Subject to 415(h)?
201 Common Control Depends on Controlled Group Type
187 Common Control and 401(a)(26)
129 No Mandatory Coverage for Housekeeper
123 Controlled Groups, Common Control and SEPs
115 Avoiding Controlled Groups By Staying Unincorporated?
85 Nonprofits and Controlled Groups
78 415 Limits with Similar Businesses
62 Common Control Sponsor Withdrawal
50 SIMPLE IRAs and Related Employers
40 Management Function Group and Common Control Group
30 Corp and LLCs as Controlled Group
19 Tax exempt organizations and common control
6 Common Control with Sole Proprietorship and Corporation
   
Traditional Affiliated Service Groups
238 Professional Service Corporation Exemption to the Rescue
233 WSJ Forgets ASG Rules
231 Regularly Providing Services as an A-Organization
221 Inadequate Facts Lead To Inadequate Answers
219 Employee for B-Org HCE Purposes
213 ASG with Separate Plans
208 Expense Sharing Arrangements As ASGs
206 Proprietorship as Partner in an Emergency Medical Partnership
203 Laser Surgery Center in ASG
164 Insurance ASG Issues; Referral of Clients Means "Regularly Associated"?
157 HCEs and ASGs
152 B-Orgs and Significant Services
149 Husband and Wife, Each Practicing Medicine as Sole Proprietors
148 Treatment of LLCs Under the ASG Rules
145 ASG Arising from Shared Administrative Functions?
140 Professional Partnerships
130 Mortgage Company as Service Organization
127 Merged Business Can Be Separate From Earlier Businesses
126 Proprietorship and Corporation not an ASG
121 Dentists as Investors
120 SIMPLEs and ASGs
107 Partner as Affiliated Service Group Entity
87 Multiple A-Orgs in an Affiliated Service Group
80 Billing Corporation as B-Org?
77 Equipment Leases and Affiliated Service Groups
76 Having Just a Single Customer Doesn't Mean Aggregation is Required
72 Look Both Ways When Crossing Railroad Tracks or When Analyzing Affiliated Service Groups
47 Sole Proprietorship and Affiliated Service Group
36 Deduction limits for ASG
33 Effect of ASG on SARSEP
27 Classic ASG with multiple plans
   
ASG Attribution
226 Collapsing an ASG
223 Attribution From Entities Under Different Rules
217 HCE Attribution from Trusts
167 Attribution Through Grantor Trust
156 Attribution Through Children's Trust
147 What's the Difference Between Sections 267 and 318?
146 Is 267 or 318 Attribution Used for Affiliated Service Groups?
144 ASG Attribution to Entities
134 Attribution to Entities (continued)
133 Layers of Attribution to Entities
113 Community Ownership of Attributed Stock?
110 Attribution to Entities
109 Contingent Beneficiary As Shareholder-Employee
98 Grandchildren as Highly Compensated Employees
95 In-laws as HCEs
83 Stepchildren Under Attribution Rules
69 HCE Attribution Rules Between Parent and Child
60 Attribution for Highly Compensated Employees
54 Attribution to Mother-in-Laws
15 Parent child attribution rules
   
HCE Status
217 HCE Attribution from Trusts
157 HCEs and ASGs
138 Community Ownership Affects HCE Status
98 Grandchildren as Highly Compensated Employees
95 In-laws as HCEs
83 Stepchildren Under Attribution Rules
60 Attribution for Highly Compensated Employees
54 Attribution to Mother-in-Laws
   
Management Function Groups
232 Management Company Might Be PEO
216 What Is a Management Function?
145 ASG Arising from Shared Administrative Functions?
119 Trustees as Managers
112 Family Management Company
108 Doctor as Management Firm
102 Construction Management Function Group
97 Directors As Managers
88 414(m) Proposed Regs Withdrawn?
40 Management Function Group and Common Control Group
21 Principal business of a management organization
16 Management function group and controlled group
   
Related Party Rules
156 Attribution Through Children's Trust
147 What's the Difference Between Sections 267 and 318?
112 Family Management Company
94 Are Brothers and Sisters Related Parties?
   
Other Issues
237 Differing Provisions In Multiple Employer Plan
229 Overlapping Groups and Filing Requirements
218 Multiple Employer Plan Involving Controlled Group
196 Testing a PEO Multiple Employer Plan
184 Multiple Employer Plan or Multiple Plans?
183 Definition of Compensation in a Multiple Employer Plan
141 Consequences of Separate Status for Partnerships; Owner-Employee Rules
116 Company Splitup (414(a))
90 Multiple Restaurants; One Plan?
78 415 Limits with Similar Businesses
75 How to Handle Ex-Employees After Spinoff to Form an Unrelated Company
73 Does a plan automatically cover employees of an affiliated employer?
49 Statutory Employees

Last Revised 01/16/03


Copyright 2005, S. Derrin Watson.  All rights reserved.