Draper55 Posted Monday at 04:10 PM Posted Monday at 04:10 PM Could a plan sponsored by a sole proprietorship be amended to include a partnership for the prior plan year if the partnership adopts the plan before the tax filing due date?
Peter Gulia Posted 9 hours ago Posted 9 hours ago Are the partnership and the proprietorship under common control? Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
austin3515 Posted 8 hours ago Posted 8 hours ago If the Partners contributed to the plan sponsored by the sole proprietorship in 2025 then yes they could in my opinion. SECURE 2.0 makes it clear you can amend for failures like this. They cannot retroactively adopt the Plan though and make contributions today for 2025. Retroactively adopting a 401(k) plan to a prior year is baazarly limited exclusively to Schedule C sole proprietors with no other EMPLOYEES (i.e., if they had employees who were not eligible, retroactive adoption is not available). Let's say in April 2026 Partners contributed to the Schedule C's 401(k) Plan. Based on the foregoing that seems way to aggressive even under SECURE 2.0 EPCRS expansions. They can of course adopt a profit sharing plan though. I'm not sure the existence of a controlled group changes things, personally. If the Sole Proprietor is a 50/50 Partner in some other venture, they could of course sponsor a single 401k plan. But I'd be curious to know why @Peter Gulia is asking :). Austin Powers, CPA, QPA, ERPA
Peter Gulia Posted 7 hours ago Posted 7 hours ago If a retirement plan has participating employers not under common control (and not otherwise one employer under Internal Revenue Code § 414(b)-(c)-(m)-(o)), the plan might be a multiple-employer plan. Beyond ERISA’s title I and the Internal Revenue Code, a multiple-employer plan might be burdened by some consequences under Federal and State securities laws. Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
austin3515 Posted 7 hours ago Posted 7 hours ago I'm not familiar with securities laws but I'm very familiar with multiple employer plans. The nondiscrimination rules apply separately to each employer, but thankfully this Plan would be exempt from all testing. The OP did not mention but I am under the assumption that there are only partners in the partnership and no employees. Austin Powers, CPA, QPA, ERPA
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