SECTION 14. AFFILIATED

SERVICE GROUPS; LEASED EMPLOYEES

Scope .01 This section provides procedures for determination letter requests on affiliated service group status under § 414(m), and whether an employee is a leased employee and is deemed to be an employee of the recipient employer for qualification purposes under § 414(n).

Employer must request the determination under § 414(m) or § 414(n)

.02 Generally, a determination letter will indicate whether the employer is a member of an affiliated service group under § 414(m) or whether an employee is a leased employee and is deemed to be an employee of the recipient employer under § 414(n) only if the employer requests such determination, and submits with the determination letter application the information specified in section 14.06 or section 14.07 below.

Forms .03 Form 5300 is submitted for a request on affiliated service group status or leased employee status. Form 5307 cannot be used for this purpose.

Employer is responsible for determining status under § 414(m) and § 414(n)

.04 An employer is responsible for determining at any particular time whether it is a member of an affiliated service group and, if so, whether its plan(s) continues to meet the requirements of § 401(a) taking into account § 414(m). An employer or plan administrator is also responsible for taking action relative to the employer’s qualified plan if that employer becomes, or ceases to be, a member of an affiliated service group. An employer that is the recipient of services of leased employees within the meaning of § 414(n) is also responsible for determining at any particular time whether a leased employee is deemed to be an employee of the recipient for qualified plan purposes.

Pre-approved plans .05 An employer that has adopted a pre-approved plan and wants a determination with respect to § 414(m) or § 414(n) must submit the information required by section 14.06 or section 14.07 of this revenue procedure and any other materials necessary to make a determination along with Form 5300. When an employer requests a determination regarding affiliated service group status or leased employees, the plan will be reviewed on the basis of the Cumulative List that was used to review the underlying pre-approved plan.

Required information for § 414(m) determination

.06 A determination letter will be issued with respect to § 414(m) only if the employer requests such a determination and the application includes:

(1) A description of the nature of the business of the employer, specifically whether it is a service organization or an organization whose principal business is the performance of management functions for another organization, including the reasons therefor;

(2) The identification of other members (or possible members) of the affiliated service group;

(3) A description of the business of each member (or possible member) of the affiliated service group, describing the type of organization (corporation, partnership, etc.) and indicating whether the member is a service organization or an organization whose principal business is the performance of management functions for the other group member(s);

(4) The ownership interests between the employer and the members (or possible members) of the affiliated service group (including ownership interests as described in § 414(m)(2)(B)(ii) or § 414(m)(6)(B));

(5) A description of services performed for the employer by the members (or possible members) of the affiliated service group, or vice versa (including the percentage of each member’s (or possible member’s) gross receipts and service receipts provided by such services, if available, and data as to whether such services are a significant portion of the member’s business) and whether, as of December 13, 1980, it was not unusual for the services to be performed by employees of organizations in that service field in the United States;

(6) A description of how the employer and the members (or possible members) of the affiliated service group associate in performing services for other parties;

Sec. 14.06 2013–1 I.R.B. 215 January 2, 2013

Required information for § 414(n) determination