What happens to a Solo 401k if you hire a full time employee?
The Solo 401k plan is for self-employed professionals and business owners without any full time employees. However, what happens if one day you want to grow your business and hire some full time employees? Find out more about the Solo 401k and full time employees in this Solo 401k Quick Tip video:
Solo 401k and full time employees
If one day you decide to hire a full-time employee, you will not be able to contribute to a Solo 401k account any longer and your plan needs to be amended. You can choose to start a new 401k to include your employee, or start an IRA account. Then, you can rollover your old Solo 401k plan to the new account. Otherwise, you can also choose to “freeze” your Solo 401k. You will not be able to contribute to the plan, but you will retain control over the funds and your investments can grow uninterruptedly.
