Controlled Group & 401(k) Individual

[Guest jkhanna]

A is a sole proprietor Sch C filer with no employees and has a 401(k) Individual plan putting away the maximum $45k say in the 401(k) account in 2007. He provides professional services.

A becomes a 50% partner in an LLC in 2008, the other 50% owned by B in an operating business. The professional services provided by A and the business - are otherwise unrelated and different.

Does this jeopardize A's intended maximum contribution to his 401(k) plan for 2008? Is this 401(k) plan required to be offered to all employees of the LLC business?

[Guest Sieve]

These are always difficult without a sit-down to discover & discuss all the facts, because there are service issues as well--e.g., does one entity perform significant services for the other entity (which may very well be likely here). And issues concerning attribution of ownership to family members, from trusts, etc. Or shared employee issues. So we may not have all the facts from which to reach a reasoned conclusion, and others may want to explore those issues.

But, based simply on the ownership that you've described, and nothing more, all 3 -- A, B & LLC -- can have retirement plans independent of one another.