1099 sole proprietorship question

[Scuba 401]

lets say you have individuals who are employees of a company and participants in the company 401(k) plan and also receive 1099 income from a member of the controlled group. what would they have to do to include their 1099 compensation in the plan? i am thinking they would need to adopt the plan as a sole proprietorship and account for any unpaid social security withholding. am i on the right track. plan definition of compensation is total compensation/w-2.

[Bird]

Yes, probably having each sole prop adopt the existing plan would be best.

[12AX7]

Scuba, you posted a similar question not long ago, so I'm not sure if this is a different situation or not:

http://benefitslink.com/boards/index.php?showtopic=46819

Are these "employees" receiving W-2 and 1099 income from the employer? I'm not convinced right now that they are sole props.

[Scuba 401]

Scuba, you posted a similar question not long ago, so I'm not sure if this is a different situation or not:

http://benefitslink.com/boards/index.php?showtopic=46819

Are these "employees" receiving W-2 and 1099 income from the employer? I'm not convinced right now that they are sole props.

yes it is basically my same question but i added a little twist. that is to have the individuals adopt the plan. my concern is in the converting of 1099 compensation to plan compensation.

[12AX7]

If these individuals are getting a W-2, then they are certainly not sole props. With regard to compensation, you'll need to refer to the plan document. It had been suggested in the prior thread (maybe by me) that plan comp would include 1099 earnings. There's some great valuable info in the prior thread. If you're not sure about the definition of comp in your document, speak to your document provider.