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.
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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