Planophyte

Responding to Larry, there are differences between a "solo" 401(k) and a 401(k): Assets in the former can be reached in bankruptcy. Also, if memory serves, there is no 5500 reporting requirement for the "solo" 401(k). If the owners decide to set up a different plan in future years, they'd be well-advised to transfer the solo to an IRA.

Depends on your age. You are taxed at marginal rates regardless but if you are under the min. distribution age, you pay an additional 10% penalty