The Solo 401(k) plan may be adopted by an individual sole proprietor, or any other business entity, such as an LLC, corporation, or partnership. In general, in order to be eligible to benefit from the Solo 401(k) Plan, one must meet just two eligibility requirements:
(i) The presence of self-employment activity.
(ii) The absence of full-time employees.
The following types of employees may be generally excluded from coverage:
- Employees under 21 years of age
- Employees that work less than a 1000 hours annually
- Union employees
- Nonresident alien employees
In sum, so long as the individual has a business, which can be a sole proprietorship or any entity, and the business has no full-time employees other than the owner or spouse (not treated as an employee under ERISA), the business is eligible to adopt a Solo 401(k) plan.