solo 401k add wife in family business

[Guest weprin]

In Sunday's New York Times their was a article about being able now for a spouse to file a schedule C in a family business so that she can get her social sec. credits before you needed a partnership. I have a Solo 401k and she has one from a business that she stopped 1 1/2 years ago. Now if she is able to file a schedule C from my work will she be able to add to her solo 401k or can she now be included in my solo 401k. Her last company was as a private duty nurse and mine is a pest control company. She helps by answering the phone etc. Also if I do split the income to the 2 schedule C's do i have to split the gross income and then take expenses away or just do one gross and then give her a amount?

[masteff]

On your Sch C question, that's beyond the scope of this board. Here's a link to the instructions for the form. It discusses that change. http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

As to which plan to use, it would be most likely that she would contribute to yours as it is the plan for that specific business. You should talk to the financial company you have your plan with about their procedures for when another person is added.

Does anyone else have an opinion on the question about whether the wife would use her own or use his plan?

[Belgarath]

Off the cuff, I'd tend to agree with you that she would generally be included in his plan. Even if they have to file separate Schedule C's when they elect this "joint venture" thing, they would have a controlled group, I think? I don't know enough about income taxation/social security etc., to know what the benefit is of it being a joint venture as opposed to employer/employee. Maybe one of the accountants who understands this garbage can chime in?

[Bird]

I don't know enough about income taxation/social security etc., to know what the benefit is of it being a joint venture as opposed to employer/employee. Maybe one of the accountants who understands this garbage can chime in?

Not an accountant but my guess is that this is easier, or perceived to be easier, than paying spouse on a W-2 (and certainly easier than filing as a partnership).

I agree that she should (probably) be included in his plan.

Anyway, I learned something today.