Owner Only 401(k)

[PMC]

Family owned business - 5 individuals all of whom are more than 5% owners. No other employees. Sub-S corp. and from what I've been told they receive W-2 income. Any issues with establishing a 401(k) for this employer? Would it be considered an employee benefit plan with no common law employees?

[WDIK]

They should be able to establish a 401(k) plan.

[Kimberly S]

If your 5 owners are getting W-2s they have 5 emplolyees not no employees.

[austin3515]

I think a plan that covers only a sole owner, or only a >50% owner and his/her spouse would be exempt from ERISA. Actually, the isntructions to the 5500 do get into this (under Who should File), because plan's not subject to ERISA need not file a 5500 (though they might need the EZ form).

Interestingly, if they were all partners unincorpoated, I believe the answer is different.