Compensation question

[fiona1]

Employee A works as an employee of Company X and participates in the Company X 401(k) Plan.

Employee A also works as an independent contractor (receiving a Form 1099) for specific contract work performed for Company X.

The 401(k) plan uses the simplified 415 definition of compensation with no additional exclusions. Should the pay received as an independent contractor be included as 415 compensation under the 401(k) plan?

[Bird]

I don't think there's any doubt that if the compensation is properly classified as 1099 that it does not count as plan compensation. It's unusual, but if it is carved out as contract work it might indeed be properly classified.

[Peanut Butter Man]

Not sure if, for plan purposes, an individual can simultaneously be both a common law employee and an independent contractor.

[ETA Consulting LLC]

I don't think there's any doubt that if the compensation is PROPERLY classified as 1099 that it does NOT count as plan compensation. It's unusual, but if it is carved out as contract work it might indeed be properly classified.

"Like"

When you pay someone on a 1099, you're saying they are not your employee with respect to the services being rendered. If I work for McDonald's as a cook and get paid on a W-2, I can conceivably receive 1099 income for lawn care services I provide to the restaurant from my side landscaping business.

Good Luck!