Watch the helpful video below for a quick walk-through of how we’ll prepare your Solo 401k plan if your business (LLC) has multiple members other than you and your spouse.
Multi-owner business Solo 401k plans
What’s different? How do they work? What do you do next?
Solo 401k plans are intended for one business owner and your spouse.
If your business has partners other than your spouse (business partners, other LLC members, shareholders, etc), you’ll receive a special type of Solo 401k plan. In this special plan, the other business partners are excluded from participating in your Solo 401k plan. This keeps your plan truly Solo.
Remember, 401k funds are kept in a trust. Part of the reason you are allowed to be your own trustee is because only your (and your spouse’s) funds are in the trust. You cannot be the trustee for someone else’s retirement funds, as that would cause you to be a fiduciary. When multiple party’s funds are mixed in one 401k trust, a third party administrator is needed, as well as Fidelity Bonds, ERISA bonds, and all kinds of other expensive paperwork and maintenance.
If you have business partners other than your spouse in your business, that’s OK. We will create the special type of Solo 401k plan that will exclude your business partners from participating. There is no extra charge for us to prepare this type of Solo 401k plan.
The Solo 401k plan will function for you and your spouse like any other Solo 401k plan including checkbook control, freedom to invest, participant loan included, etc. The only difference will be that the other members of the LLC will be excluded from participating.
People are not allowed to be excluded from participating in a retirement plan by name as that is discrimination. Rather, the role of the other members is what is excluded.
Here’s what to do next:
After you watch the video above, send us a message with the distinct title/role of each business partner. Let us know which role is for you and which is for your spouse (if applicable). We’ll then exclude the other roles from participating in your Solo 401k plan.