Solo 401k Controlled Group Question
QUESTION:
I am interested in starting a Solo 401k for a business that I own 100% of the stock. I also own 50% stock in a second business which is an S-corp and pays me wages. The second business also has 3 other full time employees. Is the 50% ownership in the second business going to prevent me from opening a solo 401k for the business that I own 100%? The 2 businesses are not related in any way other than me owning stock in both.
I'm a little confused about the whole controlled group concept. I don't think that the 2 businesses would be considered a controlled group, but I am not sure. Could you please assist me in figuring this out?
ANSWER:
Assuming the other business owner is not related, your understanding is correct that neither the affiliated service nor the controlled group rules would not apply here since you do not own 80% or more of the second business (the S-corp), so you could open a solo 401k plan.
Comments