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Which kind of investment account for a 1099 contractor?

Ross Ikle

I work for myself as a 1099 contractor with a large insurance brokerage house. They offer a privately held company stock that they will match contributions on. I've tried setting up both my contribution account and the unvested matching account in Quicken as a 401K type account. I'm just wondering if I chose the correct investment account "type" to effectively track this kind of investment. Thanks. Quicken Home/Business Premier for Windows 10 2018.

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Tom Young

Well using a 401(k) Account here is probably wrong in a "legal" sense as independent contractors can't usually be enrolled in a company's 401(k) plan as those plans are limited to bona fide employees. But if a 401(k) Quicken Account works in your particular situation then I wouldn't worry about it.

But you might want to add some details here to see if the Quicken 401(k) Account really is appropriate. With 401(k) plans amounts contributed by the employee are usually "pre-tax" contributions meaning that the amount contributed doesn't show up in Box 1 of the W-2. Too, matches by employers are also not considered current compensation and might or might not have a vesting period.

unknown

I've been in the situation you describe before. However this time, I'm not an employee of any kind...I'm an independent contractor. I don't get a W-2. I'm also responsible completely for my own taxes. I'm not sure which kind of accounts I should setup in Quicken to track my contributions to the Company's stock purchase plan (ISOP), as well as the company's matching contributions.

mshiggins

I've been in the situation you describe before. However this time, I'm not an employee of any kind...I'm an independent contractor. I don't get a W-2. I'm also responsible completely for my own taxes. I'm not sure which kind of accounts I should setup in Quicken to track my contributions to the Company's stock purchase plan (ISOP), as well as the company's matching contributions.

I would choose the type of account that most closely captures the tax treatment and/or that enabled transaction downloading.

Is your company stock account tax deferred or taxable?

Tom Young

I've been in the situation you describe before. However this time, I'm not an employee of any kind...I'm an independent contractor. I don't get a W-2. I'm also responsible completely for my own taxes. I'm not sure which kind of accounts I should setup in Quicken to track my contributions to the Company's stock purchase plan (ISOP), as well as the company's matching contributions.

I think you need to understand the tax implications here to make your best choice as to what type of Account will serve you best.

Can you deduct your contributions?
Does the customer match count as current income, or not?
Does the customer match have a vesting period?

unknown

I've been in the situation you describe before. However this time, I'm not an employee of any kind...I'm an independent contractor. I don't get a W-2. I'm also responsible completely for my own taxes. I'm not sure which kind of accounts I should setup in Quicken to track my contributions to the Company's stock purchase plan (ISOP), as well as the company's matching contributions.

Thanks. I'll have to check into the tax handling with the ISOP administrator.

Tom Young

I've been in the situation you describe before. However this time, I'm not an employee of any kind...I'm an independent contractor. I don't get a W-2. I'm also responsible completely for my own taxes. I'm not sure which kind of accounts I should setup in Quicken to track my contributions to the Company's stock purchase plan (ISOP), as well as the company's matching contributions.

ESOP = "Employee Stock Ownership Plan" which is a qualified retirement plan.

ISOP = "Independent Contractor Ownership Plan"?? I must admit I've never heard of that.

Maybe your customer is the poster that asked this question?
https://www.avvo.com/legal-answers/can-i-set-up-an-esop--employee-stock-options-progr-1837106.html