opening a solo 401k account to make private loans to others

BACKGROUND: I’m interested in opening a solo 401k account to make private loans to others from, and have a few questions.

My business makes about $90k per year, and I would like to tax-defer $50k per year.

I am married, and my wife works in the business and also has an IRA with $80k in it that we could roll-over.

QUESTION 1: Can we together defer the $50k per year with a solo 401k, or are the deferral limits per account, and not per person?

ANSWER:  The annual solo 401k contribution limits apply separately to each business owner.

For the 2014 tax year, you can each defer up to $52,000 per year.

QUESTION 2: The business is an LLC and has it’s own EIN.  Do I need another EIN that is separate from even that one for the 401k?

ANSWER:   Yes the solo 401k trust requires its own EIN.


Aleks in Utah

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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