‘‘(i) GENERAL RULE.—A leasing orga-
nization that is a qualified staffing firm
may elect, for any year, to have a plan that
it sponsors and that is described in section
401(a) or 403(a) treated as maintained by
more than one employer for purposes of
applying sections 410(b) and 401(a)(4).
For these purposes, (I) all the employees
who perform services directly for a recipi-
ent and related persons and who would be
treated as leased employees of the recipient
but for the requirements of paragraph
(2)(B), shall be treated as employed by
that recipient, and (II) all employees who
do not meet the requirements of subclause
(I) shall be treated as employed by the
leasing organization. Such leasing organi-
zation may also elect, for any year, to have
a plan that is subject to section 105(h)(3)
and (4), or to section 125(c), tested on a
comparable basis under section 105(h)(3)
and (4), or under section 125(c), as the
case may be.
‘‘(ii) SPECIAL RULES.—A leasing or-
ganization electing under this paragraph
(6)(A) may, under regulations prescribed
by the Secretary, elect in the alternative to
have subclause (I) of paragraph (6)(A)(i)
applied (I) to all employees who perform
services directly for the recipient and the
related persons, whether or not they would
be treated as leased employees of the recip-
ient, or (ii) only with respect to selected re-
cipients and related persons. Notwith-
standing the foregoing, in the event that a
five-percent owner (as defined in section
416(i)) of a recipient is covered by a plan
described in paragraph (6)(A)(i), then such
leasing organization shall be deemed to
have elected disaggregation in accordance
with subclause (ii) of this clause with re-
spect to such recipient and related persons.
‘‘(iii) 
EFFECT
OF
DISQUALIFICA-
TION.—If the plan of a leasing organiza-
tion electing under this paragraph (6)(A)
fails to satisfy the requirements of section
410(b) or section 401(a)(4) with respect to
the person deemed to be the employer
under paragraph (6)(A), only that portion
of the plan that is treated under paragraph
(6)(A) as maintained by such person shall
be disqualified.
‘‘(iv) TREATMENT OF RELATED PER-
SONS.—For purposes of this subparagraph
(A), the term ‘‘recipient’’ shall not include
any person that is a related person with
respect to the leasing organization.
‘‘(B) HIGHLY
COMPENSATED
EMPLOY-
EES.—Whether or not the leasing organization
makes an election under subparagraph (A), sec-
tion 414(q) shall be applied to employees of a
leasing organization that is a qualified staffing
firm by treating the employees who perform
services for a recipient or related persons and
who would be leased employees of the recipient
but for the requirements of paragraph (2)(B)
as employed by, and receiving compensation
from, the recipient or the related person for
purposes of determining whether the employees
are highly compensated employees of the leasing
organization.’’.
SEC. 5. REVISIONS TO SAFE HARBOR PROVISION.
(a) REVISIONS TO SAFE HARBOR PLAN REQUIRE-
MENTS.—Subparagraph (B) of section 414(n)(5) of the
Internal Revenue Code is amended to read as follows:
‘‘(B) PLAN REQUIREMENTS.—A plan meets the re-
quirements of this subparagraph if—
‘‘(i) such plan is a money purchase pension
plan or a profit-sharing plan, with a nonintegrated
employer contribution rate for each participant
which is at least 7.5 percent of that portion of the
participant’s compensation attributable to services
performed for the recipient, and which is not de-
pendent on the current or accumulated points of the
leasing organization or on whether the participant
makes an elective contribution or employee contribu-
tion to such plan.
‘‘(ii) such plan provides for full and immediate
vesting,
‘‘(iii) if the plan is a profit-sharing plan, such
plan meets the distribution requirements of section
401(k)(2)(B) with respect to all employer contribu-
tions, and
‘‘(iv) each employee of the leasing organization
who performs services for the recipient immediately
participates in such plan.’’.
(b) EXTENSION OF SAFE HARBOR RULE TO ADDI-
TIONAL EMPLOYEE BENEFITS.—Paragraph (5) of Section
414(n) of the Internal Revenue Code is amended by add-
ing at the end the following:
‘‘(D) SPECIAL
RULE
FOR
ADDITIONAL
EM-
PLOYEE BENEFITS.—To the extent provided for in
regulations issued by the Secretary, in the case of a
requirement described in subparagraph (C) of para-
graph (3), this subsection shall not apply to any
leased employee with respect to service performed
for a recipient if—
‘‘(i) such employee is covered by a plan for
an arrangement that is maintained by the leas-
ing organization and that meets such require-
ments as the Secretary shall prescribe in regu-
lations, and
‘‘(ii) leased employees (determined without
regard to this paragraph) do not constitute
more than 20 percent of the recipient’s non-
highly compensated work force.’’.
SEC. 6. EFFECTIVE DATE.
The amendments made by this Act shall take effect
on the date of the enactment of this Act. In the case of
a plan that covers employees of a qualified staffing firm
who are providing services for a customer pursuant to a
service contract and that was adopted and in effect before
the date of enactment of this Act, such amendments shall
not take effect until the first day of the first plan year
that begins after the date of enactment of this Act, and
the plan shall not be required to be amended to reflect
this Act until the end of such plan year.
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