Solo 401(k) Plans

[Chipwood 24]

Seems like different practioners in our industry see these differently. When changes were made to EGTRRA making these available, the counsel we used at our firm indicated that you could have MORE THAN 1 Owner on these.  Some others see it differently.  How does everyone see that?

The Term "Solo" is just really a marketing term or gimmick, from my perspective.

For example, if Jack and Dave own 50% each of ABC, there are no other companies that are owned by them, no common-law employees who reach 1,000 hours, then they could have ONE Solo(k) and both participate in it, correct?  To go a step further, if they're spouses work for the company and get a W-2, they could also contribute, correct?

Also, if you have 4 separate owners at 25% each (and not CG or ASG issues), they could all set up ONE Solo(k) and each participate, correct?

[Lou S.]

From a tax code stand point I agree with you.

From a Plan Document and Custodial Account agreement and what each provider allows - read the document(s).

[CuseFan]

Exactly, any limitations are service provider imposed, not regulatory.

[Below Ground]

22 hours ago, Chipwood 24 said:

Seems like different practioners in our industry see these differently. When changes were made to EGTRRA making these available, the counsel we used at our firm indicated that you could have MORE THAN 1 Owner on these.  Some others see it differently.  How does everyone see that?

The Term "Solo" is just really a marketing term or gimmick, from my perspective.

For example, if Jack and Dave own 50% each of ABC, there are no other companies that are owned by them, no common-law employees who reach 1,000 hours, then they could have ONE Solo(k) and both participate in it, correct?  To go a step further, if they're spouses work for the company and get a W-2, they could also contribute, correct?

Also, if you have 4 separate owners at 25% each (and not CG or ASG issues), they could all set up ONE Solo(k) and each participate, correct?

You are 100% correct in that the term "Solo" is a marketing gimmick.  It is is just a 401(k) Plan that covers the owners and spouses.  Any restriction, such as only one person and no spouses, is imposed by the institution offering the program, and not regulations.  With a "Solo 401(k) Plan" you simply have one plan that covers the owners and spouses of a given firm, that just happens to not have any eligible employees.  Your closing statement would make no sense since you could design a single plan to basically achieve that same result if that is the goal, assuming there are no employees beyond owners and spouses.  It all comes back to the label "Solo" being a marketing gimmick.