The federal tax law allows employees to participate in their employer’s 401k plan to take advantage of the tax deferral on contributions to the retirement account. However, if you are a self-employed member of a small business that operates as an LLC, the IRS allows you to set up a 401k plan for yourself.

Can an LLC contribute to a solo 401k?

ANSWER: Any type of entity can adopt a solo 401k plan. Therefore, if your LLC is the self-employed business that has no full-time employees, a solo 401k can be adopted using the LLC as the self-employment qualifier. The brokerage account for the solo 401k can be setup at any of the following brokerage firms.

What makes a company liable for a 401k plan?

Artificially inflated its stock price because of a failure to disclose adverse information. Misled participants through deceptive company communications. Failed to appoint an independent fiduciary despite the company’s conflicted interests as stock issuer and plan sponsor.

Is it a fiduciary risk to have company stock in 401K Plan?

The decision to offer company stock is a major fiduciary risk. A plan sponsor’s fiduciary obligations require it to follow the terms of its plan. However, if the plan mandates the inclusion of company stock as an investment option, simply saying you were required to offer the stock will not get you off the hook.

Who is responsible for company stock in 401K Plan?

Have undivided loyalty to participants. Essentially, the employer, as plan sponsor, must act solely in the interests of the plan and its participants, for the exclusive purpose of serving plan-related goals, and cannot consider the goals of the employer in the decision to offer company stock. Act in a prudent manner.

What does ERISA say about company stock in 401K Plan?

ERISA expressly states the duty of asset diversification within the plan’s investment options and the duty of prudence to the extent it would otherwise require diversification from company stock. Following the terms of the plan’s documents.