Solo 401K and 501(c) 3 status
Dear Sir/Madam,
I have a gentleman who set up a Solo 401K for his company in 2011. In July 2014 his company obtained 501(c)3 status.
I have been told by the plan administrator that with this status, he is still eligible to maintain a Solo 401K. However, he cannot make a profit-sharing contribution for 2014. Also, he can only make salary deferral contributions moving forward.
Does this sound correct or would he need to shut this plan down with 501(c)3 status?
Thanks in advance,
Chris
Permalink Submitted by John Peterson on Sun, 2015-03-22 21:08
The fact that the employer is a 501(c)(3) tax exempt organization has no impact on the employers ability to offer a 401(k) plan and to make profit sharing (now more appropriately called “employer non-elective”) contributions, you’re getting bad advice from the plan administrator