Are contributions required every year for my Solo 401k?
Am I required to make annual contributions to my Solo 401k plan?
No, contributions are not required every year.
However, note that substantial and recurring contributions can indicate that the plan was established as a permanent program, which is the design of a retirement plan. If the plan appears to be established as a temporary program, it can potentially lose its qualified status.
A plan will be considered temporary if:
- The plan is abandoned within a few years after being established for reasons other than business necessity
- Substantial and recurring contributions are not made to the plan
A plan will be considered permanent as long as substantial and recurring contributions are being made, even if contributions are not made every year.
Note that an adopting business of the plan does reserve the right to discontinue the plan's profit sharing contributions, without jeopardizing the plan's status as a permanent program.