Not for profit hospital has a 457(f) plan where contributions are made for non-employed physicians as compensation for taking call for the hospital.
There is a 3 year vesting period for contributions.
Once contributions vest they become taxable to the participant, whether distributed or not. Hospital issues the participant a 1099-MISC reporting the vested amount (contribution plus applicable earnings) in Box 6 Medical and health care payments.
I find nothing in the 1099 instructions to support this, whereas 457(f) distributions are specifically addressed in the W-2 Instructions for Box 1, bullet point 15. However, W-2 Box 1 compensations is applicable to employees, whereas the physician participants in the call pay plan are not otherwise employees of the Hospital.
Is the reporting of this income on a 1099 appropriate? Or does the 457(f) arrangement by default qualify the participants as employees, and this should be reported on a W-2 instead? Any guidance on this is appreciated.
