Will.I.Am Posted October 9 Share Posted October 9 I have a client who pays people who could be classified as independent contractors as statutory employees and issues them a W-2. Do these employees count towards the limit of determining if a plan sponsor has to do auto enrollment or not? Link to comment Share on other sites More sharing options...
RatherBeGolfing Posted October 9 Share Posted October 9 20 minutes ago, Will.I.Am said: I have a client who pays people who could be classified as independent contractors as statutory employees and issues them a W-2. Do these employees count towards the limit of determining if a plan sponsor has to do auto enrollment or not? If they are employees, they count. Lou S. and Bill Presson 2 Link to comment Share on other sites More sharing options...
Peter Gulia Posted October 10 Share Posted October 10 The small-business exception provides: “[Internal Revenue Code § 414A](a) shall not apply to any qualified cash or deferred arrangement . . . earlier than the date that is 1 year after the close of the first taxable year with respect to which the employer maintaining the plan normally employed more than 10 employees.” I.R.C. (26 U.S.C.) § 414A(c)(4)(B). Some might interpret that sentence’s use of the word “employee” to include nonemployees classified as statutory employees if those workers are not excluded from a § 410(b) count of which employees, leased employees, and self-employed individuals are treated as employees. Yet, there is a further element about whether an employer (or a service recipient treated as an employer) “normally employed” those workers. That phrase might be imprecise or ambiguous. This is not advice to anyone. BenefitsLink neighbors, has the IRS published guidance on this? Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
Lou S. Posted October 10 Share Posted October 10 It might be addressed in your plan document whether a Statutory Employee is considered and employee or independent contractor for purposes of the plan. The Plan's eligibility might also address whether or not Statutory Employees are eligible for the Plan or not, assuming they meet any other Plan eligibility conditions or if they are specifically excluded. Though typically I think when statutory employees get covered under employer plans there is much higher likelihood that they are then Common Law Employees. You can always run the question by counsel if you are not sure or the document is unclear. Link to comment Share on other sites More sharing options...
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