Solo-k (Single Participant) Plans

One-participant 401(k) plans typically called Solo-k (Single Participant) plans are a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan.

CDSA-SoloKPlans

Contribution limits

The business owner wears two hats in a 401(k) plan: employee and employer. Contributions can be made to the plan in both capacities. The owner can contribute both:

  • Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit:
    • $18,000 in 2017 and $18,500 in 2018 if age 50 or over. Individuals 50 and older can contribute an extra $6,000 in “catch-up” contributions.
  • Employer nonelective contributions up to:
    • 20% of net earned income

Total contributions to a participant’s account, not counting catch-up contributions for those age 50 and over, cannot exceed $54,000 for 2017 and $55,000 in 2018.

Testing

A business owner with no common-law employees doesn’t need to perform nondiscrimination testing for the plan, since there are no employees who could have received disparate benefits.

A one-participant 401(k) plan is generally required to file an annual report on Form 5500-SF if it has $250,000 or more in assets at the end of the year. 

Administrative

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