Former Employee now 1099

[MGOAdmin]

A former partner in a law firm is now just a 1099 employee of the law firm as they are of counsel.

This former partner maximized his benefit in the cash balance plan of the law firm. Can we set up a new cash balance plan for him using his 1099 wages or are his 1099 related to the law firm somehow and therefore he has already reached him maximum benefit?

[Peter Gulia]

Despite some bar associations' efforts to promote consistency in usage, the label "of counsel" is widely used to refer to several different kinds of relationships.

To get to your pension-law question, you and your client might want to read the individual's agreement and consider other information to help discern whether the individual is (regarding the firm he or she is described as of-counsel to) a retired capital-interests partner, a retired income-interests partner, an employee, or a nonemployee contractor.

 

[Larry Starr]

7 hours ago, MGOAdmin said:

A former partner in a law firm is now just a 1099 employee of the law firm as they are of counsel.

This former partner maximized his benefit in the cash balance plan of the law firm. Can we set up a new cash balance plan for him using his 1099 wages or are his 1099 related to the law firm somehow and therefore he has already reached him maximum benefit?

Just FWIW; there is no such thing as a 1099 employee.  There are 1099 independent contractors, and there are W-2 employees.  Never the twain shall meet.

Peter's response is spot on.  This is a facts and circumstances situation; if you want counsel to provide an opinion, hire Derrin.

[Luke Bailey]

The ABA, last I checked (which was a while ago), had a booklet on what "of counsel" means, and the of counsel attorney can be a K-1 partner getting guaranteed payments, a W-2 employee, or a sole proprietor with payments reported on a 1099-MISC. If a sole proprietor AND he or she no longer has any capital account or trailing interest in receivables, in theory they could have their own plan, since the 414(m)(5) and (o) proposed regs (which would have prevented) are currently a dead letter. If they still have a capital account or interest in receivables of even $1, then 414(m)(2)(A) would require aggregation.