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Hey all! I have two [unrelated] questions that I have been pondering over recently, thought the experts here may be able to give me a hand.

1. After reading IRS pub. 590, I'm still not 100% clear on the definition of "contribution" to one's 401(k) plan. The three facts I know are this, 1) My plan limits one to a maximum contribution of 16% of their gross pay, to be plaed in the 401(k) before taxes; 2) my company matches the first 6% of gross at 83.33333% (or another 5% gross); and 3) under new federal guidelines, the maximum allowed non-taxable contribution to a 401(k) is $11,000. So my question is, is that $11,000 just my part, or does it include my employer's match? If I made 68,750 gross annually, could I put my full 16% in there ($11,000), and then have my employer match me at an additional 3,437.50 for a total "contribution" to my 401(k) that year of $14,437.50; or...
is it 11,000 total between me and my employer which means I could contribute my maximum allowed 16% if I were to make 52,380.95 or less annually, because 16% of that oplus my employer's 5% would total 11,000 for the year?

and now,
2. My sister-in-law wishes to "employ" my wife (her sister) as a nanny-type of person for her two children. After reading the pubs. on Household employees, etc. it seems that the IRS just assumes that any type of babysitting or nanny work will constitute an employer-employee relationship, with my sister-in-law needing to withold the appropriate taxes, keep the appropriate records, etc. Is it possible to keep things simple and say that it is a contractor-contractee relationship instead [i.e. my sister-in-law contracts her sister to watch her children while she is at work or in class, but doesn't place any further restrictions on how or where this is to be done], and all my sister-in-law has to do is give a 10990-MISC at the end of the year, and my wife and I deal with the SE tax, the quarterly-estimated payments, etc?

Thanx in advance for your help! TTFN!

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