To preface, most Solo 401k plans are not multi-owner plans.
Most Solo 401k plans are not multi-owner plans because IRS rules prohibit non-spouse partners from sharing a single plan, making them rare and more administratively complex.
If your business has non-spouse partners/owner(s), you’ll need a special type of plan where the other owner(s) are excluded from participating. This special type of plan requires additional work from our documents team, as well as an administrative fee to prepare the required special exclusions.
These exclusions are important to ensure the plan remains compliant with IRS rules, as shared plans among non-spouse partners are not permitted.
The (non-spouse) owners of your business are excluded by role title from participating in your Solo 401k.
This legal exclusion is mandated to prevent co-mingling of retirement contributions and ensure IRS compliance for Solo plans.
If you have a Multi-Owner Plan, please read the following to identify important information in your plan.
Why Married Spouses Are an Exception
Married spouses running a business together are allowed to share a Solo 401(k) plan because they are legally treated as a single financial unit for tax and retirement planning purposes. This unique legal standing does not apply to unmarried or unrelated business partners.
Access Your Plan Documents
Log into your Solo 401k dashboard at https://app.solo401k.com. Then pull up your documents. Click on your initials in the top right corner of the screen and select “Documents”.
Select your plan documents that will be labeled something similar to Solo 401k Plan & Trust_ Multi_Owner
Once that has been located, download or view the file.
Review Multi-Owner Business Solo 401k Information
Our documents team will list the excluded non-spouse owner role titles on Page 9 of your plan document package in the Summary Plan Description:
Non-spouse owners are also listed on page 30 (in your Adoption Agreement) as excluded from making any contributions to your Solo 401k plan:
These exclusions mean the non-spouse owners of your business are unable be able to participate in your plan. This allows the plan to remain truly "Solo".
This ensures that the retirement accounts are individually managed and comply with IRS requirements for truly independent plans.
If your business partners would like a plan of their own, they would open their own Solo 401k plan for the same business. Their plan should include the same exclusion so that you aren’t eligible to participate in their plan.
Each partner is required to set up an independent Solo 401(k) plan, ensuring compliance and optimizing individual retirement benefits.