BACKGROUND & QUESTION: The self-employed business I set up the self-directed solo 401k under was a web based marketing company I owned franchise rights to. That company recently went out of business this year. I assume I need to find or create another business to continue with the solo 401k. What are some of the more popular businesses that you are aware of that I could pursue? It does not have to make a lot of income and I do not want it to take much time, as I just need it to be legal so I can use my Solo401k properly for self-directed financial investments. Thoughts?
ANSWER: One can continue with the solo 401k; he or she just won’t be able to make any annual contributions if self-employment income ceases. In short, a solo 401k plan does not have to be closed when self-employment stops. However, if one would like to make ongoing annual contributions, he or she can perform self-employment activity from a wide variety of businesses. For example, one can be a handy man, a baby sitter, a carpenter, an architect, an attorney, a CPA, etc. At the end of the day, one would need to perform services that lead to self-employment income in order to make annual solo 401k contributions.
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