Ask the Self-Directed IRA and Solo 401k Experts

I have an S Corporation and wanted to adopt a solo 401(k) Plan – can I do this? I know there are some S Corporation restrictions regarding retirement accounts and ownership.

Frank P., NH

Hi Frank,

The IRS created the Solo 401K Plan to be a cost effective retirement solution for the self-employed or a business owner with no employees. A Solo 401K is perfect for sole proprietors, small businesses and independent contractors such as consultants. A Solo 401K plan offers the same advantages as a Self Directed IRA LLC, but without having to hire a custodian or create an LLC. A Solo 401K Plan can be adopted by any business type including an S Corporation.

S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are subject to tax at their individual income tax rates. Unlike a C Corporation, which is subject t a double level of tax, this allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.

To qualify for S corporation status, the corporation must meet the following requirements:

The Solo 401(k) plan is a perfect retirement solution for a business owner operating a business with no employees via an S Corporation.

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