Individual 401k for W-2 contractor

I work as a contract programmer for several clients, and for some, I work from home, and my hours at each client vary quite a bit from week to week. I can easily pass the IRS test of "self employment". However, for most of my clients, I get paid W-2 wages, not directly from the client, but from pass-through, pay roll companies. For example, this year, I will have 4 W2s and 2 1099s, all from different companies. I am not eligible for contributing to 401k plans at any of the pass- through payroll companies I get paid through, because the length of the contract is usually less than 6 months, which is the minimum eligibility period for most companies for setting up a 401k.

MY question is: Am I eligible to set up an individual 401k, even though some of my income is W2 income and technically I am considered an employee of the payroll company?

Reply to
John Bliss
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You're not "considered an employee of the payroll company," you're a temp. If you want to be self-employed, quit the "payroll company" and go make bids on your own.

You can use your non W-2 Schedule C earnings as the basis for retirement plan contributions. See IRS Publication 560.

Reply to
Phil Marti

Actually you cannot pass the "self-employment" test because you are an intended victim of the ~infamous~ Section 1706 of the 1986 Tax Reform Act which effectively makes individuals who provides certain technical services (computer programming, systems analysis, engineering, designing, drafting) are the employees of the third parties through whom they contract this work.

This was the handiwork of Daniel Patrick Moynihan and I have yet to meet a single person who was not opposed to it.

Unfortunately, no. Write letters to your U.S. Representative and to your U.S. Senator.

Dick

Reply to
Dick Adams

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