3 owners form an LLC, but want different benefits from the plan(s)

[Santo Gold]

3 sole props (no employees) decide to merge and form an LLC. 2 of them have their own 1-life 401k plans. They will all be equal owners (33%). Their intention is to "run" things as separately as possible, yet share employees, building space, etc. They also may want different contribution levels for themselves for retirement plan purposes. For example, the older owner wants to put away as much as he can, while the younger owner may want to fund his plan minimally.

Can they maintain 3 separate plans, 1 for each of them, with different levels of funding? I assume the answer is no since when they become an LLC, I assume the sole prop are no longer in existence and hence, there is no sole prop income from which to fund the plan.

However, could they set up a 401k with with separete classifications for the 3 owners, much like a new comp plan. Each classification is funded however much each owner wants to put in for himself. A 4th group would be all other employees. We would have to test for 401a4, but if they would pass, then this would work?

Is there a better way to accomplish their goals?

[J Simmons]

Perhaps the LLC could employ the staff, own/rent the building, etc. Each of the three owners could set up a separate corporation of which he/she would be the only employee. His/her corporation would have a contract with the LLC for facilities and services from the LLC. For the LLC, a safe harbor 401k plan is set up and 5%-of-pay contributions made. Each of the owners' corporations could adopt a safe harbor 401k plan for that corporation's employees (i.e., just that owner), which specifies that it is permissively aggregated with the LLC's plan. The older owner's corporate plan would allow him/her to electively defer $15,500 + $5,000 catch up if age 50 or older by year's end. If his corporate plan is cross-tested, he might be able to have the corporation contribute for him as much as another $29,500 vis-a-vis the 5%-of-pay contributions made to the LLC's plan.

[Mike Preston]

What corporations?