Multiple self-employed businesses where you are the majority owner directly or indirectly does not equate to being able to open multiple solo 401k plans.
QUESTION:
Can I still contribute to the solo 401k plan from all of my self-employed LLCs?
ANSWER:
Yes you can aggregate from all sources of self-employment income for purposes of making annual solo contributions to the Solo 401k.
Aggregate from All Sourcesof Self-Employment Income:
All of your self employment income from all sources can be aggregated for purposes of contributing to the Solo 401k.
When a self-employed individual maintains more than one trade or business, the question arises as to whether the limit is based on the sum of earned income or loss from all trades or businesses under common control [as defined in IRC 414( c)) as modified by IRC 415(h)], or if only the trade or business maintaining the plan being tested is used.For purposes of the IRC 415 limit, earned income for the self-employed individual is based on the sum of the earned income from all the controlled trades or businesses, regardless of whether the related employer maintains a qualified plan [Reg. 1.415-2(d)(6)].
EXAMPLE: Andy, a sole proprietor, operates a law practice as a sole proprietor and has $100,000 of self-employment income from such practice for 2008 (prior to the reduction for one-half of self employment tax). Andy also operates another business that incurred a loss of $90,000 in 2008. Andy renders personal services in operating both businesses, but only the law firm has adopted the qualified plan.
How is Andy’s IRC 415 limit calculated for the law practice’s qualified plan? Andy’s IRC 415 limit is based on 20% of the combined income of $10,000 ($100,000 – $90,000), less the ½ self-employment (SE) tax.
Of course, the aggregate contributions can’t exceed the limits.
2 Comments
George, I came across your article on aggregating multiple sources of self-employment income for Solo 401(k) contributions (“Aggregate from Multiple Sources of Self-Employment Income for Making Self-Directed Solo 401k Contributions”) — really helpful piece, and honestly it’s part of what led me to structure my 2025 contributions the way I did. I have a Solo 401(k) sponsored by my S-corp consulting LLC, and I also have separate self-employment income (1099-NEC, personal Schedule C, unrelated to the S-corp), and based on your article I understood I could aggregate earnings across those sources for contribution purposes.
Here’s where I’ve run into trouble: my plan’s Adoption Agreement defines compensation strictly as W-2 compensation, since it’s an S-corp-sponsored plan. My S-corp paid me $0 in W-2 wages for 2025 (minimal business activity that year). Meanwhile, I made a ~$36,000 discretionary employer contribution and part of a ~$23,000 after-tax contribution (later converted in-plan to Roth in December) computed off my separate 1099 self-employment income — following the aggregation logic from your article — but that income source doesn’t appear to be a plan document’s recognized/adopted compensation source under the current Adoption Agreement, since the S-corp itself never paid me wages.
I’d really value your read on this, given you wrote the piece I was working from — is there something in how the plan document needs to be set up (participating employer provisions, compensation definition) to make aggregation like this actually valid under the plan itself, versus just being permissible in principle under the tax code?
Appreciate any time you can give this. Thank you
Deepu
The Solo 401k owner can aggregate eligible self-employment income from multiple sources for purposes of making Solo 401k contributions. The process is to maintain one Solo 401k and list the specific self-employed business from which the self-employment income predominates. The plan documents do not need to be updated merely because the Solo 401k owner also has another source of eligible self-employment income.
Therefore, the fact that the Adoption Agreement lists the S corporation and references W-2 compensation does not mean that the separate Schedule C self-employment income cannot be taken into account under the aggregation rule. A participating employer amendment or change to the compensation definition is not required merely to aggregate the Solo 401k owner’s eligible self-employment income from multiple sources.
The contribution calculation still needs to take into account the applicable contribution rules for each type of self-employment income. For example, S corporation contribution calculations are based on W-2 compensation, whereas Schedule C contribution calculations are based on net self-employment income using the applicable self-employed calculation.
Lastly, while not required, you can have your solo 401k plan provider check off the box on the adoption agreement where it has language similar to the following: The Plan Sponsor is a member of a controlled group. List all members of the group (other than the Plan Sponsor).NOTE: Listing controlled group members is for information purposes only and is optional.