Solo 401k for a photographer or phothrography business

BACKGROUND: I will make my solo 401k questions for a photographer brief:

1. I am a retired 77 Year old, with a traditional IRA at Edward Jones, and they have it in 10 “dividend” paying stocks.

2. I do NOT have a business, although my wife is a great photographer, and we could start a “small” business if we had to.

3. I would not expect to need the tax advantage of putting earnings into a Solo 401K.
4. My ONLY interest is to protect what I have, by controlling my own investments, which would be metals and land. (I am scared of stocks and paper).

QUESTION: Would your solo 401k program be right for me?

ANWERS: Solo 401k plans are for the self-employed. Therefore, yes a photographer who is self-employed through a photography business may qualify to open a solo 401k for investing in real estate and precious metals; however, a few solo 401k setup requirements must be satisfied.

First requirement for opening a solo 401k is to be self-employed, whether on a part-time or full-time basis. Visit IRS Publication 560 to learn more about this.

Second, the self-employed business may not employee any full-time employees (defined as those, besides both spouses, working more than 1,000 hours).

Third, each spouse must perform self-employment activity/work for the business in order for each to contribute, so in your case, you would need to be performing work for the business in order to transfer other retirement funds including IRAs to the solo 401k.

Because each solo 401k participant would need to have a separate individual account to hold his or her contributions including transfers from IRAs, in your particular case your name would need to be listed on the account. For example, if the name of the solo 401k plan is Eazy Photos Solo 401k Trust, the bank account for the solo 401k would read as follows:

Eazy Photos Solo 401k Trust, F.B.O. Roy Doe

If your wife also wishes to contribute or transfer other retirement funds to the solo 401k, her account would be setup as follows:

Eazy Photos Solo 401k Trust, F.B.O. Alena Doe

As you can see, it is the same solo 401k plan but just two separate holding accounts for holding each solo 401k participants funds, whether transfers or contributions. An easy way to understand this requirement is to think about big companies like Home Depot who offer a full-time employer 401k plan to its employees. Each Home Depot employee participates in the Home Depot 401k; however, they each have their own participant 401k in order to segregate each participants’ contributions from the other employees.

Thank you,

Roy in Nebraska

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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