QUESTION: I have a question about the effective date on the Self-Directed Solo 401k trust adoption agreement. When I applied for the Solo 401k EIN, I put in the first month of the year. I did this because I assumed that this would allow me to include all of my owner-only business income for the year when calculating my contribution. Could you tell me what the benefits/downsides 01/2012 vs 10/2012?
ANSWER: As long as the Solo 401k is opened by 12/31/12 (i.e., Solo 401k docs are executed by thi date), you have until your tax return due date plus extensions to make your 2012 tax year Solo 401k contribution(s). Put simply, it’s okay if you inputted January vs October; the pertinent item is that the Solo 401k docs are executed by 12/31/12; therefore, you can open Solo 401k checking account after you execute the Solo 401k establishment documetns. To that end, you will be able to take all of this year’s income from self employment into consideration when calculating your 2012 Solo 401k contribution as long as the Solo 401k documents are executed by 12/31/2012.