Jump to content

Eligibility


thepensionmaven

Recommended Posts

A 1099 "employee" has been with a client for 7 years and is now a W-2 employee.

Eligibility 21/12 months with entry the 1st of the month following.  Must this guy wait 12 months, as technically he was not an employee priorly?

Or, maybe he was, but the client treated him as 1099 as a way to keep him from being an employee?

Link to comment
Share on other sites

30 minutes ago, thepensionmaven said:

Or, maybe he was, but the client treated him as 1099 as a way to keep him from being an employee?

Maybe that question should be answered first?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Link to comment
Share on other sites

If he was really a common law employee for tax purposes all this time, your client has a much bigger plan issue then simply whether he enters the plan now or a year from now.

Link to comment
Share on other sites

I should have said "may" have a much bigger plan issue . . . .   A well-drafted plan would exclude anyone from eligibility who was treated as a non-employee for tax purposes regardless of how the should have been treated for tax purposes.

Link to comment
Share on other sites

Threshold question is whether the IC classification was appropriate.

If this was a misclassified employee, then the company may have to go back and fix a bunch of stuff and maybe correct how their current contractors are classified or how they are treated.  If this was a correctly classified contractor, then presumably the worker-company relationship had some meaningful changes in the changeover (i.e. more than just job title and contract, and not just the employer electing to use 1099).

If contractor classification was appropriate, or if you just want to assume it was appropriate and not go looking under rocks, then it's no more meaningful than if this worker was previously a vendor, a consultant, or a seconded employee working onsite.  Those folks are not employees either.

If they are pushing to give this worker credit for non-employee service, then maybe the company should re-examine their worker classification practices?

Link to comment
Share on other sites

Assuming the 1099 worker was correctly classified as a non-employee, then once he becomes a W2 employee, that is the point at which you start tracking his service for eligibility.  So yes, he must wait 12 months from the date he became a W2 employee.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...