Can you open a Solo 401K when you’re 70 years old?

My parents are selling their business and retiring. They're going to make some money on the sale and are worried about taxes. They have earned income for this year to date from the business, so I am wondering if they can contribute the max to a newly opened Solo 401K and at least get the tax deferred until later. Or does it not make sense because they'll need to make mandatory withdrawals since they're 70. Is this something they should try to pursue?

Answer: Unlike a Traditional IRA which the regulations do not permit contributions once the owner reaches age 70 1/2, the solo 401k is not subject to this restriction. Therefore, the solo 401k participant can open a solo 401k and make contributions past age 70 1/2; however, he or she must commence taking required minimum distributions (RMDs) at age 70 1/2. Be aware of confusion surrounding the RMDs rule that allows participants in full-time employer plans who do not own 5% or more of the employer to delay taking RMDs past age 70 1/2 as long as they are still working. This exception to the RMD rules does not apply to solo 401k plans because the solo 401k owner is a 5% or more owner.