QUESTION:
I like to find out if AA LLC can set up a self-directed 401k aka solo 401k?
Company AA was formed as LLC ( partnership Tax return form 1065 ) but later converted for tax purpose to S corp ( tax returns form 1120S ) .
Owners of AA LLC are family members ( individual X and Y ) with 50/50 ownership.No other employee . AA LLC pays salary to X & Y . X & Y are brother and sister .
Can AA LLC have a solo 401K?
ANSWER:
Yes a self-directed 401k aka solo 401k can be adopted by an S-corporation and the shareholders can participate in the plan if they are more than 2% owners as well as employees of the S-corp.
Lastly, the controlled group rules outlined here also need be considered.