Can I invest money into an Individual 401k at my LLC, and save in excess of the revenues of that LLC? | 401k Questions

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Asked 7/8/2011

Can I invest money into an Individual 401k at my LLC, and save in excess of the revenues of that LLC?

I have a FT job where I am not offered an employer sponsored retirement plan. I also do some consulting on the side and have an LLC set up for that. Can I establish an individual 401k at my LLC, "invest" my income into that LLC, and make contributions in excess of the revenues of the LLC?

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Answer 1/1 - Submitted 7/8/2011

LLCs are usually either sole proprietorships or partnerships. Neither of these will allow a contribution in excess of your profit (not revenue). It's one of the drawbacks of a sole prop or partnership, as the owner can't draw "wages" and so the 401(k) is based on net profit.

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