"Start-up Guide: Benefits Plans In The Co-Employment World Of PEOs"

Among the many value-added benefits PEOs offer to their clients are retirement plans and health and welfare plans. If you have worked at other employers in the past, you have no doubt participated in such plans, but working in the PEO context creates a new twist on such programs.

401(k) Retirement Plans

The 401(k) plan is a key component of a PEO’s service package. However, the 401(k) plan offered by a PEO is different from other 401(k) plans because the co-employer relationship creates unique issues. For many years, the IRS did not know quite how to deal with such plans. Was the 401(k) one big plan sponsored by the PEO covering all the co-employees from all the co-employers? Or, was it a collection of individual plans sponsored by the individual co-employers and only sharing a document and investments?

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