Am I eligible for a solo 401K?

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Topic Author
SilverGirl
Posts: 47
Joined: Sun Oct 15, 2017 8:55 pm

Am I eligible for a solo 401K?

Post by SilverGirl » Fri Nov 08, 2019 4:45 pm

I currently own a business with employees and we no longer have a 401k plan. We are an SCorp and I get a salary plus distributions.

I am creating another company to do a different type of work, and won't have any employees. I want to eventually transition to this alone, and sell the business that has employees.

Am I eligible for a Solo 401k through the second company or not?

niceguy7376
Posts: 2441
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Am I eligible for a solo 401K?

Post by niceguy7376 » Fri Nov 08, 2019 4:59 pm

What type of business does your current company do and the new company do?
Are both companies owned totally by just you?

Topic Author
SilverGirl
Posts: 47
Joined: Sun Oct 15, 2017 8:55 pm

Re: Am I eligible for a solo 401K?

Post by SilverGirl » Fri Nov 08, 2019 5:06 pm

Current company is a childcare center, owned 50/50 by my husband and I. He does have a 401k at his job.

New company is software development. I did this before I opened the center and have started again on the side. I want to go back to it full time but anticipate it taking several years before I phase out of owning the preschool.

Spirit Rider
Posts: 11692
Joined: Fri Mar 02, 2007 2:39 pm

Re: Am I eligible for a solo 401K?

Post by Spirit Rider » Sat Nov 09, 2019 1:13 am

It does not matter what the type of the businesses are unless one of them has >= 50 employees.

Under family attribution rules both businesses are deemed to be owned 100% by both spouses. These two businesses are a controlled group. You can not adopt a one-participant 401k plan until you have no non-owner/spouse eligibile employees in any business owned by you and/or your spouse.

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