Individual 401K - owner that is not employee

[Guest NorCal-EastBay]

I've done a lot of reading on the internet about who can/can't open an individual 401K/Single-K/Solo-K and can't quite determine if the following is possible. An individual and spouse are the sole owners of a C- Corp. It the owner and owner's spouse are NOT employees (no W-2), but for the first year took income as 1099 contractors, can they open a Single-K or Individual 401K and contribute?

Thank you.

[Mike Preston]

It is highly likely that they were misguided when they took the income as 1099. Your best advice to these folks is to get a competent accountant.

But let's, for argument sake, stipulate to the fact that the 1099 income was legit. In that case, as long as there were no employees of the C-Corp, they could have set up a 401(k) for the year in question. But you can't set up a 401(k) retroactively, so unless you used the wrong tense in your question, there is no question that they CAN NOT do it now. If their tax return is on extension, the best they can do is a SEP.