spousal partnership 401(k)
A husband-wife partnership that files a 1065, for which all earnings are subject to SE tax, would like to defer the most they can into a 401(k) plan. There are no employees. Can they each set up a solo 401(k) through their partnership, thereby possibly doubling the $49k limit plus $5,500 for over age 50, if there are enough earnings?
Permalink Submitted by mk foss on Wed, 2011-05-11 17:21
The partnership can establish a 401(k) plan that they each participate in. As long as they both have SE income from the partnership – it’s possible to each put away $49K with a combination of employee deferrals and employer profit sharing. This is true even though they are not employees. The employer contribution is always more complicated with self-employed participants, but that’s why we have computers.
Permalink Submitted by tomtom on Fri, 2011-05-20 05:01
Beware that the Elective Deferral limit is across all Qualified Plans
an individual participates in.
$16,500. (or $22,000. if catch-up) total.
The Employer Contributions with multiple Plans is unaffected.
20% Net.
So Solo401K is not an open bucket for $49,000.
As I understand.
Regards
tt