Can My Spouse Participate in My Individual 401(k) Plan?

Can My Spouse Participate in My Individual 401(k) Plan?

Individual(k)TM plans, also known as Solo 401(k) plans or self-employed 401(k)s, are designed for self-employed individuals or small business owners with no additional non-spouse employees. These plans offer many of the same benefits as traditional 401(k) plans, including tax-deferred growth and the potential for employer contributions. However, there are some requirements you need to consider before your spouse can participate in your plan.

Spousal requirements: What you need to know about Solo 401(k) plans

From contribution amounts to eligibility and participation rules, the following guidance can help answer common questions you might be asking.

  • Is my spouse eligible for my Solo 401(k)?

    If you actively employ your spouse, they may be eligible to participate in your Solo 401(k) plan. This means your spouse must be legitimately employed by the business and earning compensation as either a co-owner, partner, or employee. Your registered business structure helps determine how your spouse will be included in your plan.

    • Sole proprietorship: You are the only business owner, and your spouse is included as a W-2 employee in your business.
    • Partnership: You and your spouse will be listed as co-owners of the business. Each spouse receives a share of partnership income as reported on Schedule K-1.

  • How much can we contribute to an Individual 401(k)?

    One of the benefits of including your spouse in your Individual 401(k) plan is having higher contribution limits.

    • For 2025, you can contribute up to $70,000 to your Solo 401(k), up to $77,500 if you are age 50-59 or 64 and older, and $81,250 if you are age 60-63. This is the highest you can contribute to any retirement account.
    • If your spouse is participating in your plan, you both can contribute these amounts.

    By adding a spouse to your Solo 401(k) plan, you can maximize your retirement savings potential and take advantage of tax-deferred growth opportunities.

  • What happens to the Solo 401(k) plan if my spouse stops working in my business?

    They can keep their Solo 401(k) plan and are not required to withdraw or rollover their funds. However, your spouse can’t contribute new funds to this Solo 401(k) plan while they are not actively employed by your business.

  • Do I need to open a new Solo 401(k) plan to add my spouse?

    No, you can add your spouse to your existing Individual 401(k) plan by working with your plan provider—they simply amend your plan to add your spouse. Once added, separate bank and brokerage accounts are created for them, and they can start making contributions and investing.

Steps to start an Individual 401(k) plan that includes your spouse

A great starting point is talking with a financial advisor or tax professional. They can help ensure you comply with IRS rules and maximize the benefits of your Solo 401(k) plan. With proper planning and management, you and your spouse can build a robust retirement nest egg for a more secure and comfortable financial future.

Choosing the right provider is an important step, too. With more than 40 years of industry experience, Ascensus can act as your plan provider and partner. We understand that many small business owners don’t always have the time or resources to start, amend, or manage a retirement plan. That’s why our retirement solutions are flexible, transparent, and designed to help owner-only businesses like yours.

Learn more about how Ascensus can help you start or amend your Solo 401(k) plan today.

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