Is a Director considered common-law employee
1) Is a Director considered a common-law employee for purposes of SEP contributions? 2) Can a person that sits on several boards open a SEP IRA for himself and contribute his Director fees from several different companies to it?
Permalink Submitted by mk foss on Fri, 2010-03-12 04:18
In most cases a director is NOT a common law employee. The exception would be if the director was also an officer/shareholder – IRS expects that the president or CEO always be a common law employee.
Even if an individual is a director for just one corporation, they are self-employed and would qualify for a SEP. There is no age limit for a SEP so even directors over age 70.5 can create a SEP. If the director is under 70.5 depending upon the other income in their return, they might qualify for an IRA – that would give a higher percentage deduction for director’s fees.