Retroactive Solo 401(k) Inquiry

Submitted by Kevin O'Hearn on Wed, 2023-12-20 16:50

Hello,

I read the article below from your website.

https://irahelp.com/slottreport/secure-20-allows-retroactive-solo-401k-plans-elective-deferrals

SECURE 2.0 Allows Retroactive Solo 401(k) Plans with Elective Deferrals | Ed Slott and Company, LLC (irahelp.com)

Can you confirm…..would this extension apply to Solo 401ks for companies structured as Partnerships and S-Corps? Or does it only apply to Sole Proprietorships?

Thank you.



Submitted by Alan - IRA critic on Wed, 2023-12-20 19:43

  • Only to sole props – following is Sec 317 of Secure 2.0:
  •  “SEC. 317. RETROACTIVE FIRST YEAR ELECTIVE DEFER5 RALS FOR SOLE PROPRIETORS. 6 (a) IN GENERAL.—Section 401(b)(2) is amended by 7 adding at the end the following: ‘‘In the case of an indi8 vidual who owns the entire interest in an unincorporated 9 trade or business, and who is the only employee of such 10 trade or business, any elective deferrals (as defined in sec11 tion 402(g)(3)) under a qualified cash or deferred ar12 rangement to which the preceding sentence applies, which 13 are made by such individual before the time for filing the 14 return of such individual for the taxable year (determined 15 without regard to any extensions) ending after or with the 16 end of the plan’s first plan year, shall be treated as having 17 been made before the end of such first plan year.”

Submitted by Kevin O'Hearn on Wed, 2023-12-20 20:17

Thank you Alan. Would a partnership qualify as “incorporated” and qualify for the deferral deadline extension?

Submitted by Alan - IRA critic on Wed, 2023-12-20 20:24

No, see the above re Sec 317. The individual must own the entire interest and be the only employee, so a partnership would not be included. The business also cannot be incorporated, so that excludes S Corps as well.

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