Adding a spouse in a SOLO401k

[athaureaux6]

Good afternoon online community, 

Is it possible to add a spouse in a SOLO 401k. The spouse helps a lot in the business but officially is not the owner and does not receive any compensation. I wonder if there is a way to add her to the SOLO 401k to increase the contributions and as a result the deduction. Any input will be appreciated. 

[TaxGuyBill]

---

@athaureaux6 wrote:

does not receive any compensation.

---

Retirement contributions are based on taxable compensation.  No compensation mean no 401k.

If the business hires her as an employee and pay her, the business can set up a 401k for her (although depending on where the 401k is at, some changes may need to be made because it would no longer be a "solo" 401k).

[athaureaux6 · Accepted solution]

Thanks Bill. Understood. Have a great holidays and an excellent tax season. 

[qbteachmt]

"and as a result the deduction."

If they are avoiding the employee relationship for legitimate reasons, then look into Spousal IRA provisions.

If they qualify, you could have a Qualified Joint Venture, which means you would split it not just for retirement plan purposes, but consider this is where a spouse is often shorted on Social Security credits, bu not "working and earning" in the business.

Here's a in depth reference:

https://www.mysolo401k.net/solo-401k/