When it comes to retirement planning for business partnerships, the Solo 401(k) emerges as a significant option. The term “Solo 401(k)” typically brings to mind a business with a single owner. However, a Solo 401(k) can indeed be an option for businesses with multiple partners, under specific conditions.

Understanding Solo 401(k) for Partnerships

A Solo 401(k) plan, commonly associated with single-owner businesses, can also be opened by an LLC with multiple partners. A notable example is an LLC business owned by three couples seeking to establish a Solo 401(k) plan sponsored by their partnership. In such scenarios, there are no employees other than the partners themselves, who are also the business owners.  These plans typically have higher contribution limits than other small-business retirement plans.

Eligibility Criteria

For a Solo 401(k) plan to be viable in a multi-partner LLC, certain criteria must be met:

  1. Partners as the Only Employees: The LLC can establish a Solo 401(k) if the only employees are the partners (or members in the case of an LLC). It’s important to note that this plan would be classified as a “one-participant plan.”
  1. Compliance with IRS Regulations: Businesses must adhere to specific requirements as outlined by the IRS, such as checking the Instructions to Form 5500-EZ or 5500, to qualify as a one-participant plan. There are additional criteria, like the absence of leased employees, that must be met.

Plan Administration and Setup

  1. Selection of Plan Trustee(s): Business owners must designate one or more members as the named plan trustee(s). This is a crucial step in the documentation process and ensures proper management and control of the plan.
  1. Signing of Documents: Any member of the LLC (or a general partner in a partnership) is authorized to legally bind all members/partners when signing a contract on behalf of the LLC/partnership. It is recommended that the signing member does so in their capacity as a member, clearly indicating they are representing the LLC and not acting in a personal capacity.


A partnership can indeed have a Solo 401(k), provided it meets specific requirements and structures the plan correctly. This arrangement can be particularly beneficial for small businesses with multiple partners but no external employees. As with any complex financial decision, it’s advisable to consult with a tax professional or financial advisor to ensure compliance with all IRS regulations and to make the most of the retirement planning opportunities available. uDirect IRA Services can help you get started.  Email us at info@uDirectIRA.com