QUESTION: Mark, I forgot to ask you, if my clients hired their kids part-time does that void the ability of my clients to setup a solo 401k?
Thank you,
Jack I. JD, CFP in California
ANSWER: As long as the kids work less than 1,000 hours per year they will be deemed as working part time and thus do not have to be offered the option to participate in the plan. See IRS publication 560. However, if they are offered the option to participate and do so, the solo 401k will need to be converted to a traditional 401k, which we also offer and many of our clients convert to as their business grows.
