Partners want Solo 401(k) Plans Separate from Partnership's Plan

A 50-employee medical clinic is owned by four doctors' individual PAs. Each doctor's PA owns 25% of a medical clinic - the partnership. The medical clinic's 401(k) plan is funded by the partnership. Three of the four partners actively participate in the medical clinic's 401(k) plan, though as the doctors are not employees of the medical clinic, their individual benefits under the 401(k) plan are funded by their PAs. The fourth partner is new and wants to sponsor a solo 401(k) with the 1099 income he receives from the partnership rather than participating in the medical clinic's 401(k) plan.

In this scenario, is there anything wrong with the new doctor sponsoring a solo 401(k) rather than participating in the clinic's plan? Would it matter if two of the four partners wanted to sponsor solo plans?

Are the PAs in an affiliated service group with the partnership? (Probably yes - this is the classic ASG scenario, and it would explain why the three doctor partners are able to participate in the partnership's plan even though they are not employees of the partnership. However an ASG determination is highly fact-specific, and the standard advice to consult an attorney applies.)

Assuming this is an ASG, then the one doctor could adopt his own plan, but it would have to be aggregated with the partnership's plan for testing. Keep in mind that includes not just benefits (ADP/ACP, etc) but also availability of benefits, rights and features, so he can't for example have an investment in his plan that isn't available to the employees of the partnership.

On 5/14/2025 at 2:45 PM, C. B. Zeller said:

Assuming this is an ASG, then the one doctor could adopt his own plan, but it would have to be aggregated with the partnership's plan for testing. Keep in mind that includes not just benefits (ADP/ACP, etc) but also availability of benefits, rights and features, so he can't for example have an investment in his plan that isn't available to the employees of the partnership.

Are you saying all (100%) of the benefits, rights and features in the new partner's solo plan must also be available and at least as favorable in the existing partnership's plan?

1 hour ago, AJC said:

Are you saying all (100%) of the benefits, rights and features in the new partner's solo plan must also be available and at least as favorable in the existing partnership's plan?

It has to pass the test on BRF. If he's the only one who has the option then 0% of the NHCEs have the option it's not going pass since the ratio will be 0%.

let's say, the solo 401(K) allows investment in bitcoin futures.  Unless the main 401(k) allows investment in bitcoin futures as well, the BRF test is flanked.

Suppose all the plans have the same provisions and same investment options. You are fine to aggregate them for testing.

The solo plans are a non-public EZ filer, which may be the goal here. If so, go for it. Charge appropriately, of course. 

As pointed out above, but worth repeating, this appears to be a classic A-Org type of ASG with the partnership as the FSO and the PA's as the A-Orgs. If so, there are 4 separate ASGs with each A-Org being an ASG with the FSO. Coverage and non-discrimination testing will follow based on the 4 separate combinations of common control under 414.