Solo 401k Plans For Multi-Member LLCs and Partnerships

Looking to open a Solo 401k plan? Get started today – The Carry Solo 401k Plan is a featured-packed self-directed account that lets you invest in both traditional and alternative assets, take out a loan, or do a Mega Backdoor Roth conversion.

Solo 401k plans are designed for self-employed individuals or business owners with no full-time employees other than a spouse. But the rules get more complex when your business is a multi-member LLC or partnership.

In most cases, your business may still qualify—as long as all partners are actively involved and there are no non-owner employees. Each eligible partner could potentially contribute to the same Solo 401k plan, provided the plan is set up correctly.

This guide explains how Solo 401k plans work for multi-member LLCs and partnerships, including setup steps, contribution rules, and filing deadlines. It also covers how roles should be defined and how income is reported for contribution purposes.

Who Qualifies for a Solo 401k in a Multi-Member LLC?

To open a Solo 401k, the business must not have any full-time employees other than the owners and their spouses. This includes multi-member LLCs and partnerships. As long as the company doesn’t employ any non-owner individuals who are age 21 or older and have worked at least 500 hours in two consecutive years, it generally meets the eligibility rules. Any form of self-employment income — including income from a business, side hustle, or freelance work — can also qualify.

In a qualifying LLC, all actively participating partners must be included in the Solo 401k. The business can’t set up separate Solo 401k plans that exclude certain partners, because the LLC is treated as a single employer for retirement plan purposes.

📌 Also read: What Business Entities Can Open A Solo 401k?

Setting Up a Solo 401k for a Multi-Member LLC

Although a Solo 401k is designed for owner-only businesses, a multi-member LLC with no common-law employees can still open one plan that includes all eligible partners. To comply with IRS and ERISA rules, the process requires a few key steps, you’ll need to take a few important steps — especially when it comes to defining member roles and setting up the correct plan structure.

Step 1: Define Roles for Each Business Partner

Retirement plans cannot arbitrarily exclude individuals, as this could be considered discriminatory. However, it is possible to assign specific roles to each LLC member — these can then be used to structure each partner’s plan independently.

The first step is to clearly define each partner’s role in the LLC. These roles must be formally documented in the LLC Operating Agreement. There’s flexibility here—roles can reflect how you run the business. Common titles include:

Step 2: Exclude Roles From Participating in Each Other’s Plans

Once roles are in place, the LLC can adopt a Solo 401k plan that covers all business owners while continuing to exclude any non-owner employees. This setup preserves the owner-only structure required for Solo 401k eligibility.

Your LLC Operating Agreement should include details on each member’s role, how profits are distributed, how decisions are made, and how conflicts are resolved. It also supports the creation of separate Solo 401k trusts under one adopting employer — the LLC itself.

Each partner’s Solo 401k will operate through a distinct trust with its own trust name, EIN, and a dedicated bank account. This setup allows each member to maintain individual plan assets under the umbrella of one compliant LLC-owned retirement plan.

📌 Also read: How Much Does It Cost To Open a Solo 401k Plan? (Free vs Paid Plans)

How Contributions Work in a Multi-Member LLC

By default, the IRS treats a multi-member LLC as a partnership for tax purposes. This means the business must file Form 1065 each year. Instead of receiving W-2s, each partner reports their share of income or loss on their individual tax return using Schedule K-1. The LLC itself typically does not pay federal income tax.

Solo 401k contributions can be made in two parts: employee deferrals and employer contributions. Each is subject to different rules.

Employee Elective Deferrals

You can contribute up to 100% of your compensation — up to $23,500 in 2025. If you’re 50 or older, the limit increases to $31,000. These contributions may be made as pre-tax or Roth.

For LLC members, “compensation” usually refers to guaranteed payments or other forms of earned income tied to active business involvement. A limited partner who does not materially participate may not qualify to make deferrals based on investment income alone.

Employer Profit-Sharing Contributions

Your LLC can also make an employer contribution on your behalf. The percentage depends on how the LLC is structured:

In partnerships, compensation for retirement purposes is usually based on guaranteed payments, not K-1 profit distributions.

Total Contribution Limits

The combined total from both employee and employer contributions cannot exceed:

Each partner’s contribution must be calculated individually, based on their own eligible compensation.

📌 Also read: Solo 401k Contribution Types Explained

Contribution Deadlines

Contribution deadlines for Solo 401k plans follow your LLC’s tax filing calendar.

A multi-member LLC must file Form 1065, which is generally due by March 15. If the LLC files for a tax extension, the deadline moves to September 15.

To ensure your Solo 401k contributions are deductible for the 2025 tax year, make sure all contributions are submitted by the appropriate IRS deadline, including extensions if applicable.

Final Thoughts

Opening a Solo 401k as a multi-member LLC is possible, but it requires careful planning. Each partner must individually qualify, and each must have earned income from the business. The LLC’s operating agreement should clearly define each member’s role to help structure separate plans while staying compliant with IRS rules.

Solo 401k contributions are based on each partner’s compensation and must follow the annual limits. Timelines also matter. Contributions need to be made by your business tax deadline, with extensions allowed if properly filed.

If you’re exploring this path, it’s a good idea to review your LLC structure, consult your operating agreement, and understand how each partner’s income is reported. You may also want to compare Solo 401k providers or look into other retirement options for self-employed business owners.

📌 For more on how Solo 401k plans work, contribution strategies, or rollovers, check out these guides:

---

Disclaimer:

The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.

To access investment advisory services through Carry Advisors, you must be a client of Vibes on an eligible membership plan. For more information about Carry Advisors’ investment advisory services, please see our Form [ADV Part 2A] (https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=916200) brochure and [Form CRS] (https://reports.adviserinfo.sec.gov/crs/crs_323620.pdf) or through the SEC’s website at [www.adviserinfo.sec.gov] (http://www.adviserinfo.sec.gov/).