"Individual" 401(k)

[Guest wjr]

Can a family:husband, wife and 2 sons, both over age 21, have the so-called Individual 401(k)?

I'm thinking they can since under Section 318 attribution rules there are no age restrictions and the 2 sons would be considered owners. Provided they do not have any other employees, there would be no testing and no filing requirements, at least until assets exceed $100,000 then should file a 5500EZ.

[Appleby]

You are absolute right- in fact; this is an ideal candidate for the Individual 401(k)-assuming their compensation makes sense. i.e. if they can already maximize in a profit sharing plan without salary deferrals, then the PSP would be a better choice.

[wmyer]

Everyone is an HCE, so there is no 401(k) testing. However, there is a filing requirement. The employer must file the full 5500 (not the EZ) because this is NOT a one-participant plan. A one-participant plan covers only the owner and spouse, or in an (unincorporated) partnership, multiple owners and their spouses. Because the owner's children are eligible, this is not a one-participant plan, despite any attribution rules.