Can a new solo 401(k) be used to accept rollover from other plan, then loan funds to the sole participant?

[Guest number6]

An individual wants to roll money from a prior employers retirement plan to a new solo(k).

The individual wants to use the solo(k) to be able to borrow against the funds which is not allowed in an IRA.

Individual does not have additional earned income going forward therefore cannot make additional contributions to the solo(k) in the future.

Can the individual set up a solo 401(k)? and

Is there any problem in this scenario?

[Belgarath]

I would say there is a problem. Contributions to a profit sharing plan must be "substantial and recurring." Instead, you could set up a money purchase plan with a zero formula, which should accomplish the same thing.

[Earl]

Do you think someone that is not in business can establish a plan of any kind? I am thinking that the "individual" must be a sole proprietor to sponsor a plan and to be a SP you have to file a Schedule C.

What if the person filed a Sched C in the past but just not now or in the future?

[Belgarath]

Earl - yes, I agree. I was making an unwarranted assumption that there was a business to sponsor the plan.