When the solo 401k plan refers to the ability to make nonelective contributions, this means the plan allows for employer profit sharing contributions. In the context of a 401k including a solo 401k plan, a nonelective contribution is an employer contribution also known as a profit sharing contribution. It is calculated based on the business owner’s net self-employment income, and is not dependent on whether the business owner makes an employee contribution or not. Therefore, the business owner can choose to solely make employer profit sharing contributions (aka nonelective contribution) without being required to make employee (aka salary deferral contributions). In sum, a solo 401k participant’s right to receive a nonelective contribution cannot depend on whether she has made an employee (aka salary deferral contributions). I.R.C. 401 (k) (4) (A) and Treas. Reg. 1.401 (k)-1(e)(6)(i)
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