How To Have A Solo 401k While Running Multiple Businesses
Running multiple businesses and maintaining a Solo 401(k) is possible, but it depends on how your businesses are structured and whether they are considered part of a controlled group under IRS rules. Here’s how you can manage it:
Common Ownership and Controlled Group Rules:
If you own multiple businesses, the IRS will likely treat them as a controlled group if you own 80% or more of each business. Under the controlled group rules, all businesses are treated as a single entity for purposes of employee benefits, including retirement plans like the Solo 401(k).
If all businesses in the controlled group have no employees (aside from yourself and possibly your spouse), you can still maintain a Solo 401(k) for your retirement savings.
If any of the businesses have employees, you may lose the ability to have a Solo 401(k) since the presence of employees across the group would require offering a retirement plan to all eligible employees.
Eligibility for Solo 401(k):
You must have self-employment income from each business to contribute to the Solo 401(k).
You can set up one Solo 401(k) that covers all businesses where you earn self-employment income, or set up separate Solo 401(k) plans for each business, provided they all qualify under IRS rules.
Contributions can be made from each business, up to the maximum Solo 401(k) limit, but the total contributions across all businesses cannot exceed the annual IRS limits. For 2025, this limit is expected to be $23,500 for employee deferrals, with additional catch-up contributions of $7,500 if you’re aged 50 or older.
Avoiding Controlled Group Conflicts:
To maintain Solo 401(k) eligibility, ensure that your businesses do not employ non-family employees, or consider hiring through a separate entity not under common ownership if possible.
If your businesses do fall under the controlled group category and have employees, you may need to transition from a Solo 401(k) to a traditional 401(k) plan that covers all employees across the businesses.
Setting Up Separate Solo 401(k) Plans:
If your businesses are unrelated (i.e., not part of a controlled group), and you earn income from multiple ventures, you may be able to set up separate Solo 401(k) plans for each business, allowing you to maximize contributions from each.
For example, you could have a Solo 401(k) for your consulting business and another for a separate side business, as long as each business generates self-employment income and has no employees.
Maximizing Contributions:
If you operate multiple businesses, the total amount you can contribute to a Solo 401(k) is based on your total self-employment income across all businesses. You cannot exceed the IRS-defined annual limit across all plans.
The total employee deferral limit applies across all businesses, meaning you can contribute up to $23,500 (in 2025) in employee contributions, plus catch-up contributions if eligible, across all plans.
Takeaway
Managing a Solo 401(k) while running multiple businesses requires careful planning to avoid violating controlled group rules and maximizing your retirement contributions. If your businesses are part of a controlled group with no employees, you can still maintain a Solo 401(k). However, if employees are involved, you may need to explore other retirement plan options, such as a traditional 401(k).
For personalized assistance in navigating complex Solo 401(k) rules, especially when running multiple businesses or dealing with controlled group issues, ZAG Consulting can provide the expert guidance you need. Whether you're looking to maximize contributions or ensure compliance with IRS regulations, we're here to help you make informed decisions about your retirement strategy.
Contact ZAG Consulting today to explore how we can assist in optimizing your financial future.
