Leased employee:
A leased employee who is not your common-law employee must generally be treated as your employee for retirement plan purposes if he or she does all the following.
Provides services to you under an agreement between you and a leasing organization.
Has performed services for you (or for you and related persons) substantially full time for at least 1 year.
Performs services under your primary direction or control.
Exception:
A leased employee is not treated as your employee if all the following conditions are met.
Leased employees are not more than 20% of your non-highly compensated work force.
The employee is covered under the leasing organization's qualified pension plan.
The leasing organization's plan is a money purchase pension plan that has all the following provisions.
Immediate participation. (This requirement does not apply to any individual whose compensation from the leasing organization in each plan year during the 4-year period ending with the plan year is less than $1,000.)
Full and immediate vesting.
A nonintegrated employer contribution rate of at least 10% of compensation for each participant.
However, if the leased employee is your common-law employee, that employee will be your employee for all purposes, regardless of any pension plan of the leasing organization.