Since my brother also helps out in my business, I have the following questions,
1.QUESTION: If I like to include my brother in my solo 401K, do we need to set up as partnership?
ANSWER: Yes and S-Corp or a Partnership will be the best entity type since your brother is also an employee.
2. QUESTION: In order for him to contribute, does my business pay him W2 or it can be 1099?
ANSWER: If a partnership, a form 1065 would be filed and a K-1 issued to report his partnership income. If an S-Corp, a form 1120S would be filed and a W-2 issued to report his income.
3. QUESTION: If the business generates enough income to pay him, he can also contribute up to $17,500?
ANSWER: Yes as the solo 401k contribution limits apply separately to each solo 401k participant.
4. QUESTION: Does the bank accounts have to be set up individually one for myself and another for him?
ANSWER: Yes as each solo 401k participants’ funds are separately accounted for so two bank accounts are needed.
Linda in Minnesota