Matching Contribution in a solo(k)

[erisa parrot]

I read a couple of articles that state matching contributions are not allowed in a Roth solo(k). Is this an accurate statement? I had the understanding that a solo(k) was simply a 401(k) with a few less reporting requirements (no Form 5500 for less than 250k in assets, for example). I can't find anything in an IRS publication that supports this statement.

I know that it isn't necessary to match as you could use the profit sharing contribution to contribute to maximum if you have a solo(k), but I am looking down the road in case employees are hired in the future.

Thanks!

[Lou S.]

I think some one is misremembering the rules back to the 1990s when matching contributions for self-employed were treated as deferrals for the 402(g) limit.

As you say whether you call it a PS or Match it has little difference in a solo-K (regardless or whether it is ROTH or regular) as the employer contributions are always non-ROTH, though you could do in plan conversion to ROTH is plan allows and participant wants to pay the taxes.

[Kevin C]

It's possible the solo(k) plan document they were referring to does not allow matching contributions. A match certainly can be allowed in any 401(k), but the document has to provide for it. I've never seen any point to having a document pared down for use only with a one-person plan. I like flexible documents. We've also had a few clients that forgot to tell us they hired an employee.

The current rule on match for self-employed is in

1.401(k)-1(a)(6)

(ii)Treatment of matching contributions made on behalf of self-employed individuals.—

Under section 402(g)(8), matching contributions made on behalf of a self-employed individual are not treated as elective contributions made pursuant to a cash or deferred election, without regard to whether such matching contributions indirectly permit individual partners to vary the amount of contributions made on their behalf.

[masteff]

I keep wondering if someone either misunderstood or took out of context a sentence such as this one: "Matching contributions and forfeitures may not be allocated to a designated Roth account." which is merely saying what Lou said above, that match is never Roth and must go into a different account in the plan.

http://www.irs.gov/Retirement-Plans/Designated-Roth-Accounts---Contributing-to-a-Designated-Roth-Account

It's a hard subject to google but the only place I found making the incorrect statement was on about.com which is a notoriously unreliable website.