Solo 401k - multiple partnerships

[bwurts]

Client has 3 partnerships: One partnership has a guarantee payment and makes money, the other two actually lose money and offset the gain. Client wants to set up a solo 401k plan for him and his wife in the "money making partnership" and defer the max allowed. Is this possible to do so if he shows no income because of offset losses in the two other partnerships?

Also with the new Temp Regs intended to halt the practice of some partnerships treating partners as employees is a solo 401K even possible? How can one defer any income if its not employee income and just a distribution

I can find NO definitive answers anywhere

Any direction would be most helpful

[Kevin C]

Sorry to be blunt, but Client needs to find an adviser who knows more about 401(k) plans.

First of all, a self employed person can be covered by a 401(k) plan. If multiple trades or businesses are involved, the only earned income considered is that from the trades or businesses that adopt the plan (IRC 401(d)). There are rules for 401(k) plans covering self employed persons in 1.401(k)-1(a)(6).

But, before they get to that point, they need to provide ownership information for the 3 partnerships mentioned and any other closely held companies the partners have an ownership interest in to someone qualified to review the situation to see how the controlled group/affiliated service group rules apply. The adviser also needs to know which of the entities have employees (including common-law and leased). It's likely additional information will also be needed. All of that affects coverage testing that will determine if they can have the plan cover only those they want covered. "Solo 401(k)" is a marketing term describing a 401(k) plan intended to cover only owners. The terms of each "Solo 401(k)" plan document will determine if they are able to use that document. If there are employees, then there is discrimination testing ...