415(b) - All Income derived from a guild - Can a separate plan be set up

[Guest erepper]

An individual is employed and all of his income is derived from a "guild" where he receives 1099 income. He participates in a DB plan with the guild. He would like to set up a db plan:

(1) Can he set up a db plan for himself (corporation)?

(2) If so, is the 415 limit offset by the benefit he receives from the guild plan

[Effen]

all of his income is derived from a "guild"

He participates in a DB plan with the guild

So he is already getting a db benefit from the guild based on his 1099 income?

[Guest erepper]

Yes he is already getting a db plan from that 1099 income (but the db benefit is less than the 415)

[Effen]

If he wasn't getting a benefit from the guild, based on this income, I would have said "no problem". I doesn't seem right that he can get two benefits, based on the same income. If you could, why wouldn't all the doctors do it?

I don't really know how it is possible for him to get a benefit from the guild, based on 1099 (self employement) income?

Hopefully, someone else will jump in.

[Guest erepper]

What would stop him if, when combined with the guild plan it is less than 415?

[Effen]

My thought is that if he is paid on a 1099 then he is self-employed. If he is self employed, then he is not an employee of the guild. (since you said he only receives 1099 income.) If he is not an employee of the guild, how is he covered in their plan?

Kind of like covering your accountant in your company's pension plan because you paid him a consulting fee and issued a 1099. If he was an employee, he would get a W-2, not a 1099.

Again, I'm probably the confused one, so I will wait for others who got more learn'n

[KJohnson]

I assume that this is the enterntainment industry, the guild plans are multis, the participant is working for a producer/studio etc and is being compensated by 1099 income and that the producer/studio is the contributing employer to the guild plan. My concern woudl be the same as Effen's but appartenly this is a common practice with entertainment industry plans. Here is a link that discusses these issues as well as the 415 aggregation issues:

http://benefitslink.com/boards/index.php?s...opic=14810&st=0

[KJohnson]

Also this is apparently from IRS guidelines on employee/independent contractor status in the entertainment industry:3. Guild or Union Benefit Payments.

Many workers in the Television Commercial Production segment (and some in the Professional Video Communications segment) are members of guilds or unions which are subject to the provisions of the National Labor Relations Act (29 U.S.C.). Generally, the collective bargaining agreements between the production companies and these guilds or unions establish various benefit plans such as health plans and retirement plans (sometimes referred to as "Taft-Hartley Plans"). These plans are authorized by 29 U.S.C. §186©(5)-(8), which require that the plans be established for the sole and exclusive benefit of employees (and their dependents). The definition of "employee" for tax purposes is the same as the definition for purposes of the National Labor Relations Act.(10)(9)

Therefore, if a company is making contributions to a guild or union benefit plan on behalf of a worker who is not providing services through a loan-out corporation (see Section VII B, below), the worker must be considered an employee. Note, however, that these guidelines do not address the treatment of workers who provide services through loan-out corporations. Thus, the analysis of payments to Taft-Hartley plans on behalf of employees of loan-out corporations is also beyond the scope of these guidelines.

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B. Use of a Loan-Out Corporation

It is not uncommon in the Industry for certain workers (particularly those that are the most highly compensated) to render their services through a loan-out corporation, i.e., a corporation owned by the worker which "loans out" the worker's services to the production company. In the 1991 case of Sargent v. Commissioner, the Eighth Circuit Court of Appeals ruled that a hockey player was an employee of his loan-out corporation, rather than the hockey team which retained his services through the loan-out corporation. The Service has 'non-acquiesced" in this decision. An analysis of the Sargent case and the issues pertaining to loan-out corporations in the Industry is beyond the scope of these guidelines. Of course, if a worker qualifies as an independent contractor with respect to the production company under these guidelines, the production company would not be required to treat the worker as an employee even if a loan-out corporation is involved. Nonetheless, the worker may be an employee of the loan-out corporation.

[Effen]

AAhh, the clouds have parted and it all becomes clear....

Thanks for jumping in "K".

[Guest erepper]

Thanks to all for your help it is very much appreciated. I guess the thing that is really gnawing at me is that his income is entirely derived from 1099's from SAG. It just seems as though I would have to offset the 415 limit by the benefits under the SAG plan. THANKS,