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Question
I am forming an LLC. I would like to know if I can open a 401K plan. I am the sole member of this LLC.
You would be better off just putting money in an IRA. A 401K is for companies with many employees. You write up a 401K plan than you send it to the IRS and it gets approved. I do not think it would be feasable for one person.
You would not be an employee , as a sole proprietor you would take your profit (salary) from draws.
Shirley
Revision. I had another expert enlighten me that there are plans called Solo-K or Uni-K for one person offices. Below is his statement. I cannot comment on these plans as I do not know about them.
a 1 person 401k. Such plans are widely known as solo-k or uni-k. The plan allows a person to deduct 25 of 'compensation' plus as much as $22,000 more in elective salary deferrals. Under IRC 401(c)(2), a self employed person is considered an employee for retirement plan purposes.
You might check with a retirement counselor about one of these plans.
Shirley
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Answers by Expert:
Shirley McAllister, CPP, PHR
Expertise
I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.
Experience
25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.
Organizations
SHRM, APA, I.O.M.A.
Publications
I.O.M.A. and BNA
Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration.
Boise State University Human Resource Certification
Awards and Honors
APA Hotline Citation of Merit for last 8 years.
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