dmertz
Level 15

Retirement tax questions

You can't establish a solo 401(k) independent of the partnership or your other partner.  The plan must be established under the partnership.  (I assume that it is a partnership from which you receive a Schedule K-1 (Form 1065) because you mentioned having a partner in the business).  The partnership could potentially establish a solo 401(k) or SIMPLE IRA plan covering the partners that provides matching contributions (or in the case of a solo 401(k) no employer contributions at all) so that contributions would only have to be made by the partner making elective deferrals or Roth contributions.  A SEP plan would not work because both partners would have to make employer contributions in the same proportion of net earnings.

 

TurboTax does have a section for reporting self-employed retirement contributions and prepares the Deduction Worksheet for Self-Employed as shown in Chapter 5 of IRS Pub 560.

View solution in original post