Offering a Retirement Benefit to Contractors Without Reclassifying Them as Employees

The problem every contractor-payments platform hears about

Your customers pay contractors. Some of those customers, the good ones, want to do something for the people they pay. They ask you whether they can offer a retirement plan to their 1099 workforce, and the honest answer is that a plan is exactly the wrong tool. Employer-sponsored plans are built around employees, and every mechanism a plan uses, from payroll deduction to employer contributions to plan eligibility, is a fact that points toward employment.

That does not mean the answer is "nothing." It means the answer has to be designed around the classification rules rather than in spite of them. This article lays out a design that works, and describes how the Gigaverse payroll partner integration implements it.

Why plans and contractors do not mix

Under the IRS common-law test, a worker is an employee if the business controls what is done and how. Under the ABC tests in California, Massachusetts, New Jersey and a growing list of states, a worker is presumed an employee unless the business proves the worker is free from control, performs work outside the usual course of the business, and is customarily engaged in an independent trade.

Retirement plans generate evidence on the wrong side of both tests:

• •Payroll deduction implies payroll.
• •Employer matching is by definition an employer act.
• •Plan eligibility rules measure hours and years of service, which are employment metrics.
• •"Benefits" as a category are something employers provide.

State auto-IRA mandates confirm the point from the other direction. CalSavers reaches every California employer with at least one W-2 employee as of January 1, 2026, and simply omits contractors (https://onpay.com/insights/what-is-calsavers-mandate). New York's Secure Choice does the same (https://www.whitefordlaw.com/news-events/client-alert-new-yorks-mandatory-retirement-savings-program). The states did not forget contractors. They understood that requiring a hiring business to enroll them would manufacture employment facts.

The design that works

Four features keep a contractor retirement offering on the right side of the line.

The worker owns the account. A contractor is a sole proprietor. They can open a Roth IRA ($7,500 limit in 2026) or adopt a Solo 401(k) for their own business with a $24,500 employee deferral plus roughly 20 percent of net self-employment earnings as an employer contribution, up to $72,000 ($80,000 at 50 and older). The account is theirs, for their business. Nobody at the hiring company or the platform is a fiduciary of it.

The worker funds it after being paid. No deduction from the invoice payment. The contractor receives their full payout, then moves money from their own bank account into their own retirement account. The platform can make that easy by surfacing the option in the payee portal after a payout lands, but the transfer is the worker's instruction.

The offering is optional and unbundled. Access is not a condition of doing work. It is not described as a benefit the hiring company provides. The language is "a resource for independent workers," and the hiring company's role is limited to making it visible.

No per-worker payment to the hiring company or the platform. If the platform or its customer were paid each time a contractor enrolled or deposited, two things go wrong. First, it looks like the company is being paid to deliver its workforce, which reads as employment. Second, and independently, compensation tied to account openings or deposits resembles transaction-based compensation under Exchange Act Section 15(a) and FINRA Rule 2040, and a share of advisory fees would violate the rule that an SEC-registered adviser cannot share fees with unregistered parties. Gigaverse therefore pays payroll platforms only a share of revenue on paid app subscriptions or a flat per-seat licence. Where the platform is compensated for referrals, SEC Marketing Rule 206(4)-1 requires a written agreement and a promoter disclosure to the worker above $1,000 in twelve months, and some states require paid solicitors of advisory clients to register as investment adviser representatives. The details are on the how we make money page.

What the platform actually integrates

A payroll platform's contribution to this design is distribution and context, not money movement.

• •Payee portal placement. A card or link in the contractor's view, visible after payouts, that describes the app and lets the worker open it.
• •Optional data pass-through, with consent. With the worker's explicit permission, the platform can pass year-to-date gross payments to the app so the contribution estimate starts from real numbers. The worker enters expenses; the app computes net earnings, self-employment tax, and the resulting limits.
• •No payout modification. The platform does not split, hold, or redirect any part of a payout.
• •Clean language in the customer-facing admin. The hiring company sees "make retirement resources visible to your contractors," not "add a retirement benefit."

What the contractor gets

A worker who was previously outside every plan and every mandate gets the same thing a W-2 employee gets from an auto-IRA program, only sized for self-employment: a running estimate of how much they can contribute, a place to contribute it, and a summary for their preparer. The free Gigaverse tools show the estimate without an account.

For lower-income contractors, the federal Saver's Match begins January 1, 2027, paying up to $1,000 into a non-Roth IRA for qualifying contributions, including Roth contributions, for filers under the MAGI limits ($20,500 to $35,500 single, $30,750 to $53,250 head of household, $41,000 to $71,000 joint). The Saver's Match Roth rule page explains where the payment lands. That is a real dollar incentive that flows to contractors your customers pay, and the state programs cannot deliver it to them.

A note on language your customers will use

Give your customers a script. Something like: "We work with independent contractors, and we know retirement planning is harder without an employer. Through our payments platform you have access to Gigaverse, a retirement app built for 1099 income. It is optional, you control it, and you pay for it if you choose to use it. We do not contribute to it, deduct for it, or receive anything based on what you put in."

That paragraph is accurate about the arrangement and safe under any classification test.

Where Gigaverse fits

Gigaverse is a subscription retirement app for 1099 workers, integrated into payroll platforms as a referral or white-label resource that never touches the payout. Today the app offers a Roth IRA through a FINRA/SIPC-member broker-dealer; it opens Solo 401(k) and SEP IRA plans through its custodian partner, with applications open now, and provides the contribution math, tracking, and a year-end CPA hand-off alongside them. Gigaverse is pursuing SEC RIA registration, does not guarantee returns, and pays platforms only through subscription revenue share or flat per-seat licences. Integration details are on the payroll partner page.