Do you have senior partners, shareholders or other lawyers transitioning to “of counsel” status this year? You need to notify us to update their status to “terminated” if they are no longer considered employees or partners of the firm.

In many cases, those considered “of counsel” are independent contractors paid via Form 1099-R as opposed to Form W-2 or Schedule K-1. Individuals properly designated as independent contractors are not common law employees or partners of the firm. As a result, they are not eligible to make additional contributions to your retirement plan, and their participant status should be updated to “terminated.”

Your lawyers with “of counsel” status can establish through the ABA Retirement Funds Program (“Program”) an owner-only 401(k) or other type of retirement plan if they are considered self-employed and would like to continue to contribute to a retirement plan. You may want to advise your participants that they can contact a Program representative to discuss this option further. To get more information call 800.752.6313 or email us at contactus@abaretirement.com.