When you’re misclassified as an independent contractor instead of an employee, it affects more than your paycheck. One big impact is how it changes your access to retirement benefits. If you’re unsure about your classification, it’s important to understand what you’re missing.
Retirement plans tied to employee status
Most employers offer retirement plans like 401(k)s only to employees, not independent contractors. If you’re misclassified, you don’t get access to these plans, even if you’re doing the same work as others who do. That means no matching contributions and no automatic payroll deductions into a retirement account. Over time, that can create a serious gap in your savings.
Missed employer contributions add up
Many employees count on their employer’s contributions to grow their retirement savings. But if you’re labeled an independent contractor, your employer has no legal obligation to contribute. This can result in tens of thousands of dollars lost over the years. You might not notice it right away, but the long-term effect can be substantial.
You bear the full savings burden
As a contractor, you can still save for retirement through accounts like IRAs or solo 401(k)s. But the responsibility falls entirely on you. You have to set up the account, make the contributions, and manage the investments. It’s easy to fall behind without the structure and support that employees receive. This often leads to inconsistent or lower savings.
Your classification isn’t just a label—it directly affects your financial future. If you’ve been misclassified, you might be missing out on retirement benefits that employees receive. Knowing your rights can help you take steps to correct the issue and protect your long-term savings.