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solo 401k and spouse t-ira?

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  • solo 401k and spouse t-ira?

    I have a single member LLC and have a solo401k on all 1099 income.  Spouse is stay at home.  Could I contribute to a Traditional IRA for spouse and deduct that or does my solo401k count as a "covered plan at work"?   I'm thinking probably not.

    Could I hire my spouse as an employee and pay w2, and then be able to contribute 18k to the solo401k as the employEE side in addition to the max I could contribute for myself (53k)?


  • #2
    Your Solo-k counts as a covered plan so I will presume your income will be too high to deduct the IRA. You can, however, do backdoor Roths for each of you.

    Yes, you can hire your spouse and she can get a combination (er, ee) of up to $53k, also. Of course, she has to have a legitimate job description and reasonable pay.
    My passion is protecting clients and others from predatory and ignorant advisors 270-247-6087 for CPA clients (we are Flat Fee for both CPA & Fee-Only Financial Planning)
    Johanna Fox, CPA, CFP is affiliated with Wrenne Financial for financial planning clients


    • #3
      A solo 401(k) is considered a retirement plan and, as such, if you are married and filing jointly, you cannot take an income tax deduction for the spousal IRA if your Modified AGI is $118,000 or more.

      Yes, you can hire your spouse if she is legitimately going to do work for (there is a bona fide relationship) you and contribute to the 401(k).
      Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF