Chapter 1: Leased Employees Flashcards
Which of the following is not a condition for an individual to be considered a leased employee?
A. The recipient and leasing organization must have an agreement covering the services of the individual.
B. The individual must be providing services on a substantially full-time basis for at least one year.
C. The recipient must have primary direction or control over the individual’s services.
D. The individual must be covered by the leasing organization’s plan.
D. The individual must be covered by the leasing organization’s plan.
Which of the following statements regarding the treatment of leased employees in the recipient’s plan is/are TRUE?
1. They are treated as employees for purposes of applying the nondiscrimination tests under IRC §§401(a)(4), 401(k), and 401(m).
2. They are treated as employees for purposes of determining who are HCEs.
3. They may not participate in an employee stock ownership plan (ESOP).
A. 1, 2, and 3
B. 1 only
C. 1 and 2
D. 2 and 3
A. 1, 2, and 3
Which of the following statements regarding the leasing organization’s multiple employer plan is/are TRUE?
1. Only one Form 5500 is filed regardless of the number of recipients participating.
2. Contributions from both the leasing organization and the participating recipients are aggregated to determine the IRC §415 limit.
3. 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.
A. 1 only
B. 2 only
C. 1 and 2
D. 2 and 3
C. 1 and 2
Which of the following is not a relevant factor in determining if the recipient has primary direction or control over services of leased employee?
A. Whether services must be performed by a particular person
B. Whether services must be performed in the order or sequence set by the recipient
C. Whether the individual is subject to supervision by the recipient
D. Whether the recipient has the right to hire or fire the individual
D. Whether the recipient has the right to hire or fire the individual.
Which of the following statements regarding multiple employer plans is NOT TRUE?
A. The plan must apply the minimum age and service eligibility requirements as if each employer were participating in a single-employer plan.
B. The plan must consider each unrelated employer separately for purposes of coverage testing under IRC §410(b).
C. The plan must consider each unrelated employer separately for purposes of ADP testing.
D. Each employer must recognize service for vesting purposes without considering service performed for any other participating employer.
D. Each employer must recognize service for vesting purposes without considering service performed for any other participating employer.
A multiple employer plan applies coverage testing under IRC §410(b) separately for each unrelated employer.
True or False?
True
A multiemployer plan is maintained under a collectively bargained agreement between an employee organization and more than one unrelated employer.
True or False?
True
A multiple employer plan is one adopted by two or more employers where at least two of the participating employers are not members of the same related group.
True
A multiple employer plan, sponsored by the leasing organization, may allow all the leasing organization’s recipient organizations to participate.
True or False?
True
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).
True or False?
True
Whether the recipient organization 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.
True or False?
False. The right to hire or fire is not a relevant factor in determining primary direction or control. It is, however, relevant in determining the common law employer and may indicate that the individual is a common law employee of the recipient, and not a leased employee.
Benefits, contributions, and compensation from all employers participating in a multiple employer plan sponsored by a leasing organization would be aggregated for each participant’s account from both the leasing organization and the recipient organization for computing the IRC §415 limit.
True or False?
True
Years of service with both the leasing organization and the recipient organization are aggregated if they both are participating employers in the same multiple employer plan.
True or False?
True
The leased employee is included in the recipient and the leasing organization’s single-employer plans for HCE determination.
True or False?
True
A multiple employer plan, sponsored by the leasing organization, must perform coverage testing separately for the leasing organization and the recipient organization.
True or False?
True.
