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Can my wife also participate and contribute to my self-directed solo 4o1k plan?

8/20/2020

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QUESTION:

We have not yet started to receive income from this business.  My spouse is retired.  Can he setup deposit into his accounts from personal funds until we start receiving income from our business?

ANSWER:


Spouse must earn self employment income from the sponsoring business entity (the self-employed business).


Only self-employment income can be contributed into solo 401k. If neither of you have earned self-employment income yet from the self-employed business that sponsors the self-directed solo 401k plan, neither participant will make contributions.

On the other hand, If you both are providing material services for the business, you could each perform rollovers into the solo 401k from previous employer plans or IRAs. You just would not make fresh contributions into the plan because there is no self employment income to justify contributions at this time.
 

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    Author


    George Blower is a principal of My Solo 401k Financial LLC and also serves as the General Counsel with responsibility for providing all legal services to the organization.  

    Prior to joining My Solo 401k Financial, he served as general counsel for a subsidiary of a Fortune 500 financial services company.  

    He received his bachelor’s degree in economics at the University of Michigan in 1998 with honors. He received his juris doctorate from Harvard Law School in 2001. He is a member of the Michigan and Ohio bar associations.

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