Who's the Employer
A Guide to Employee and Aggregation Issues Affecting Qualified Plans
Analysis of Rev Proc 2002-21
The IRS issued Rev Proc 2002-21 on April 23. This important and defining ruling on the employee staffing or professional employer organization (PEO) industry industry has broad consequences affecting many issues. This is a series of web pages devoted to a discussion of the Rev Proc. There are separate pages for each of the following topics:
This is still a rapidly developing issue. Expect the IRS, either formally or informally, to issue additional guidance explaining, refining, and perhaps expanding the Rev Proc. Additionally, expect the author's views to change and be refined as we all have more time to work with this important Rev Proc. To that end, I've added a feedback page for you to post your comments and thoughts.
In simple terms (with links to a more complete summary of the various points) the message of Rev. Proc. 2002-21 to PEOs sponsoring single employer plans is threefold:
The consequence of not being able to rely on a favorable
determination letter is so serious that few, if any, rational PEOs will forego
the opportunity to take advantage of Rev. Proc. 2002-21. Thus, they will either
terminate their existing single employer plans or go with a
multiple employer plan,
whether or not they believe they are the common law employer of their worksite
All references to the Rev Proc itself are shown with a ¶ symbol. Hence "(¶4.01)" refers to paragraph 4.01 of Rev Proc 2002-21.
Last Revised 01/31/03