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My spouse and I have two separate businesses. How do we set up the Solo 401k correctly?
My spouse and I have two separate businesses. How do we set up the Solo 401k correctly?
Jeff Nabers avatar
Written by Jeff Nabers
Updated over a week ago

The Solo 401k can only have one business listed as the Adopting Employer. All of the funds contributed to the Solo 401k need to come from that one business. No outside funds can be contributed, even if you or your spouse runs another business.

So, what do you do if you have one business that generates income and your spouse has another?

You have two options going forward:

  1. Determine which business generates the most self-employment profit because that will provide for the largest contributions into your Solo 401k (and the largest tax benefits!) and use that company.

  2. You can aggregate the income from multiple businesses by forming a new entity such as an LLC, S-Corp or C-Corp, sometimes called a holding company. Many CPAs will recommend that the businesses (your multiple businesses, or your business and your spouse’s business) can then be members or shareholders of the new entity. When the holding company (new entity) is the adopting employer of the Solo 410k , the profit of the multiple businesses will flow up to the holding company and you and your spouse can maximize your Solo 401k contributions.Check with your tax advisor and/or CPA to make sure the new holding company entity is setup correctly.

If you need to change the company you have listed as your Adopting Employer, please contact us at [email protected].

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