So. Confused (solo/individual 401(k) stuff)

[poky]

... except I think dh WILL be getting a k1 this year. Last year was his first year, and he wasn't a partner, so he got a 1099. What you're talking about is contract work, not partnership.

[spotty_dog]

Yup. My husband contracts for a group that contracts for the hospital. The hospital employs the staff and pays the overhead, and pays the group based on how many patients are seen. The group pays the doctors a fair portion of what they get. That's 1099 contract work, but that's not what this is.

Also, FWIW in terms of a 1099 meaning you *have* to incorporate...incorporating as a single-owner LLC makes very little difference to anything tax-related. Business income is still taxed on your personal taxes, same as a sole proprietorship. Having an LLC can make a difference to liability, in terms of your business being liable for its own debts, but only in certain states, AFAIK, and I don't think it means bupkiss to medical practice liability. http://whitecoatinvestor.com/incorpo...to-save-taxes/

[poky]

Wanted to follow up on this now that, two months and LOTS of emails and calls with various advisers and lawyers later, we finally have some answers:

1) Yes, the partnership is an "associated service group" by IRS rules. This turns out to be VERY important in determining what other rules apply.
2) Yes, if an ASG has W-2 employees, they MUST be offered retirement benefits to at least the highest percentage that any of the partners puts into tax-deferred retirement plans. This is a "non-discriminatory" benefit, and must be checked/audited every year for compliance. It does NOT matter if the partners are incorporated or not. Apparently, incorporating each partner USED to be a workaround for avoiding giving W-2 employees retirement benefits and still letting the partners put a bunch away, but once enough lawyers were doing it in their own firms, that loophole got closed.

I'm so grateful our adviser smelled something "off" and made us understand that he wasn't enough of an expert to make a determination, but that we NEEDED to make sure, and pointed us in the right direction. The retirement-specialist lawyer he recommended agreed with him, and convinced the lawyer that gave the partnership bad advice last year that the advice he'd given was bad, and the partnership is now working with another retirement-specialist lawyer to clean up the mess. The cleanup is still being agreed upon and hasn't been implemented yet, but it appears to consist of paying the NPs an extra 25% of what they made this year and last, to make up for not giving them the retirement benefit they were entitled to. This will allow this year and last year's SEP-IRA contributions to be OK (yay!). Then, starting next year, some long-term plan will be put in place, which may change things up slightly, but it seems to be everyone's goal that the docs be able to defer taxes on the maximum amount of money possible, so at least we're not looking at only being able to defer on traditional IRA limits.

DH's 1099/K1 status is still weird and an open question, but less urgent now that it seems that they're going to make it so SEP-IRA contributions are OK regardless. He was strictly hourly from August of 2015 through July of 2016, and got a 1099 for 2015, which made sense...and I expected he'd get another 1099 for Jan-July of 2016 and a K1 for Aug-Dec, but then we were told "oh, he SHOULD have gotten a K1 for 2015...so we'll just give him a K1 for all of 2016"..which makes NO sense, to me, except in a "let's ignore our mistake from last year and hope it doesn't matter" way...assuming it's even correct that he should have gotten a K1 for last year. So messy, but hopefully irrelevant in the long term.

I feel bad for the managing partner, who's (understandably) frustrated with the bad advice they got and overwhelmed with the decisions and paperwork and herding-cats aspect of getting a dozen EM docs to agree on something, on top of working shifts and it being holiday season. At least he gets paid more for being the manager?