-
Spouse 401k Eligibility
-
3 Replies
-
I have a LLC (sole prop) that sponsors the 401k plan.
I am the only owner and no additional employees other than my spouse.
I pay my spouse to provide IT support for my business at ~$1k per year. In the past I’ve paid them on a 1099. Do they need to be paid as a W2 employee to make them for participating in the Solo 401k?
Their contributions will be small since the earnings in this role are low, but the main appeal is to rollover old 401ks / IRAs from previous employers.
Thanks!
-
Since your LLC is taxed as a sole proprietorship, which means you file a Schedule C to report your self-employment income, you can also file a 2nd schedule C to report your spouse’s self-employment income generated under the same LLC.
-
Jen,
When it comes to solo 401(k)s the IRS makes an exception to the employer rule by allowing your spouse to also contribute to the plan. It’s important to keep in mind that no other employee, or contractor, may contribute – only you and your spouse.
What Is a Solo 401(k)? Self-Employed Retirement – NerdWallet
If you are looking to bring on employees, aside from your spouse, in the near future – you’ll have to convert to a more standard 401(k) program but you will be able to take advantage of a year long grace period.
Can I Hire Employees with a Solo 401(k)? (ira123.com)
Hope that helps!
-
Check out this page which has a tremendous amount of information on considerations with regards to adding a spouse to your Solo 401k: https://www.mysolo401k.net/solo-401k-for-working-spouses/
