Solo 401(k) if had full time employee, but don't by end of year?

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Jeef33
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Joined: Fri Jul 21, 2017 1:59 pm

Solo 401(k) if had full time employee, but don't by end of year?

Post by Jeef33 » Wed Oct 04, 2017 9:00 pm

I know that I can't start it if I have an eligible employee, but if I had an eligible employee this year who will be leaving by the end of the year am I eligible to start the Solo? Or does it have to be started in a year where I did not have any employees? Seems like they can't be eligible if they are not there, but just want to make sure that I am not missing something. Thank you.

Jeef33
Posts: 2
Joined: Fri Jul 21, 2017 1:59 pm

Re: Solo 401(k) if had full time employee, but don't by end of year?

Post by Jeef33 » Tue Oct 10, 2017 11:15 am

Does anyone have any insight on this?

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neurosphere
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Re: Solo 401(k) if had full time employee, but don't by end of year?

Post by neurosphere » Tue Oct 10, 2017 11:33 am

I'm just totally guessing here, but...

Perhaps another way of asking the question is: can you have a non-January 1 start date for a solo 401k? That is, a plan start date after you no longer had an employee.

https://www.irs.gov/retirement-plans/pl ... -your-plan
Effective date of plan. The plan may not be made effective earlier than the first day of the employer’s tax year in which the plan was adopted. In other words, an employer may adopt the plan document on the last day of its tax year, with an effective date retroactive to the first day of that tax year, but not any earlier.
This quote implies you MAY, but do not have to, choose an earlier start date. So if you start the 401k plan after you no longer have any employees, I would assume you can start a solo 401k without worrying about the treatment of non-self employees.

But why don't you call your desired/planned 401k provider and ask? I have a feeling they will know the answer.
-- Real name: Sotirios Keros. If you have to ask "Is a Target Retirement fund right for me?", the answer is yes.

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