Solo 401(k) for S-Corp
SECURE 2.0 corrects this by allowing sole proprietors to establish retroactive solo plans with both employer contributions and elective deferrals. But be careful: The deadline for adopting a new solo plan after its first year with both kinds of contributions is the due date of the individual’s tax return without extensions for the prior year.
Okay – so the question… How does the rule affect someone with a Solo 401(k) that is a S-corporation. If I am an S-corporation, can I open the Solo after 12/31 for the prior year with the same rules for employer and employee contributions?
Permalink Submitted by David Mertz on Wed, 2024-01-17 21:25
No. The change implemented by Sec. 317 of the SECURE 2.0 Act applies only to a sole proprietor (an individual who owns the entire interest in an unincorporated trade or business), so employees of an S-corp cannot make the deferral election after year end.