Adding a spouse in a SOLO401k

Forum|Forum|2 years ago
December 30, 2023
2 replies
10 views

Good afternoon online community,

Is it possible to add a spouse in a SOLO 401k. The spouse helps a lot in the business but officially is not the owner and does not receive any compensation. I wonder if there is a way to add her to the SOLO 401k to increase the contributions and as a result the deduction. Any input will be appreciated.

ProSeries Professional

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Best answer by athaureaux6

Thanks Bill. Understood. Have a great holidays and an excellent tax season.

T

TaxGuyBill

Level 15

@athaureaux6 wrote:

does not receive any compensation.

Retirement contributions are based on taxable compensation. No compensation mean no 401k.

If the business hires her as an employee and pay her, the business can set up a 401k for her (although depending on where the 401k is at, some changes may need to be made because it would no longer be a "solo" 401k).

A

athaureaux6AuthorAnswer

Level 7

Thanks Bill. Understood. Have a great holidays and an excellent tax season.

qbteachmt

Level 15

"and as a result the deduction."

If they are avoiding the employee relationship for legitimate reasons, then look into Spousal IRA provisions.

If they qualify, you could have a Qualified Joint Venture, which means you would split it not just for retirement plan purposes, but consider this is where a spouse is often shorted on Social Security credits, bu not "working and earning" in the business.

Here's a in depth reference:

https://www.mysolo401k.net/solo-401k/

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