Board Compensation and Individual 401k Plan

I have a retiree that is interested in starting an individual 401(k) plan to defer some consulting income he is going to receive over the next 3-5 years.  He also receives compensation from serving on the Board of Directors for two businesses (paid on a 1099).  Does anyone have a resource on whether or not the Board compensation could be deferred into the 401(k) plan?

If he is paying self-employment tax on the Board fees (and most likely he must), he can shelter those fees through a qualified plan, 401k or otherwise.

4 hours ago, chriskkelly said:

I have a retiree that is interested in starting an individual 401(k) plan to defer some consulting income he is going to receive over the next 3-5 years.  He also receives compensation from serving on the Board of Directors for two businesses (paid on a 1099).  Does anyone have a resource on whether or not the Board compensation could be deferred into the 401(k) plan?

No resource necessary.  He is self-employed with regard to his board of directors income and can clearly have a plan established for his self-employment income.

And if you want any support for the above other than the word of the two experts who have already responded, I have in my notes a reference (probably came originally from Sal Tripodi's ERISA Outline Book) of a case law reference to Steffens v. Commissioner, 707 F.2nd 478 (11th Cir. 1983).

Depending on the amount of self-employment compensation expected, a less expensive option may be a SEP-IRA. 

Depending on the amount of self-employment compensation expected, and the appetite for tax deductions, a cash balance or other db plan might be an option.