Solo 401k Attached to Passive Income Entity

[Bryan O.]

Hi experts. 

I recently found out how contributions work for a solo 401k and that rental income is passive. So basically I'll never be able to contribute my solo 401k in this entity. Not the end of the world, but certainly not something I want to find out after setting up the fund. (p.s. Thanks @Brian Eastman for the great breakdown on that).

I was just told that I may not even be allowed to have the solo 401k because the entity it is attached to makes more than 25% of its income from investment. It actually makes 100% from passive because that is what I made the entity for!

I get the feeling I was steered wrong in setting up this plan, but I don't want to jump to any conclusions and I've been unable to find anything from the IRS or elsewhere regarding the requirements of the entity that the 401k attaches to. Is this 25% income threshold real?