Expert: Ed McFarland - 11/17/2006

Question
Hello
I own a company where myself and my spouse are the 2 employees. For Tax year 2005, the company made a profit sharing contribution (25% of salary) to my 401K account. However, I was not aware that the company MUST also make an equivalent contribution to a 401K account in myu spouse's name. What are ramifications? WHat can be done now?
Thanks a lot!

Answer
If the plan is over 100k in assets, then it may get noticed from the form 5500. Otherwise, barring an audit or divorce, nobody is going to find out.

You missed a tax break. Talk with the plan administrator about making a catch up contribution.

If you are doing it yourselves, and you do not intend to add employees that would qualify for benefits, consider moving to a Solo 401k platform. I know of several if you want to look at one.

Good luck.