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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: neo von retorch on January 04, 2018, 02:01:36 PM

Title: What are the limits on putting money in a spousal 401(k) as a solo business?
Post by: neo von retorch on January 04, 2018, 02:01:36 PM

In late September, 2017, I started a business - basically I've always done software, and I was able to do a contract as a 1099. This let me get a good rate and to open a Solo 401(k) where I could sock away money as both employee and employer. I researched what I could, but I'm still not clear on one thing. Can I open a 401(k) under my business account for my wife? Is this only if she's an employee? Or would I have needed to register the business differently? (I created a solo LLC.) She does not get an employer-sponsored retirement plan, so we've been limited to putting up to $5500 in an IRA for her each year.

Title: Re: What are the limits on putting money in a spousal 401(k) as a solo business?
Post by: terran on January 04, 2018, 02:06:37 PM

Yes, she needs to be employed by the business. If she does work in the business you would be able to put away more to the extent that her income supports the $18.5k employee contribution, but the employer portion would end up being the same unless you're being limited by the overall $55k limit. If she contributes this would mean she is covered by a retirement plan at work and the income limits for IRA deductibility would change.