401(k) plans that only cover business owners – and their spouses – are commonly called ”solo” plans.

Solo plans are subject to fewer administration rules than other 401(k) plans because there are no non-owner – or common-law employees – to protect. 401(k) plans automatically lose their solo status once one common-law employee becomes plan-eligible.

Small businesses should prepare their 401(k) plan for this status change before it happens to avoid nondiscrimination testing issues down the road.

Preparing a 401(k) plan to lose its solo status is not complicated. This article details what you need to know to smoothly transition your plan. If you need additional assistance, an experienced 401(k) provider can help.

For more information, visit www.employeefiduciary.com.

 

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