Solo 401k unavailable if have any business with employees?

[Todd Willhoite]

I have a business with no employees for which I want to establish a solo 401k.  I have another unrelated business with one full time employee.  My wife has a business with four full time employees.  Under the Controlled Group Rules I guess that I am unable to establish a solo 401k in the business with no employees because I am deemed to own 100% of my business with an employee and my wife's business.  Is there anyway the business with no employees can establish a 401k?

I see the benefit of a 401k to me in avoiding UDFI tax, not really for the tax deductions. I have an IRA that I could role over to fund the 401k.

If I can't form a solo 401k, are there any affordable 401k plans for small businesses?

[Brian Eastman]

@Jeff Filali

That is a totally unrelated concept.  What we have been discussing here is the qualification for establishing a Solo 401k plan, which is an owner-only business format with no full time employees.

A 401k could invest in a business where someone who is not a disqualified party to the 401k in any way is providing property management services, and there would be no conflict with that same business providing property management services for plan-owned property.  

The problem, however, is that property management services are going to generate trade or business income, and the earnings that the 401k derives from that property management business would then likely be subject to UBIT taxation.