Contracts or arrangements between a Solo 401k plan and a party in interest for office space or legal, accounting, and other services or combination of services are exempt from ERISA’s prohibition against transactions between plans and parties in interest if:
- The office space or services are necessary for the establishment or operation of the plan;
- The contract or arrangement under which the office space or services are furnished is reasonable; and
- No more than reasonbale compensation is paid for the office space or services.
- See Section 408(b)(2) of ERISA for more information on this exemption.
- Regulations issued by the Department clarify the terms “necessary service” (29 CFR 2550.408b-2(b)),”reasonable contract or arrangement” (29 CFR 2550.408b-2(c)) and “reasonable compensation” (29 CFR 2550.408b-2(d) and 2550.408c-2) as used in section 408(b)(2).
The rules pertaining to prohibited transactions applicable to qualified plans including Solo 401k plans are listed under Section 406 of ERISA.