The question of solo 401(k) aggregation involves understanding how contributions to different retirement plans are treated under the Internal Revenue Code (IRC), particularly in the context of controlled groups, affiliated service groups, and the specific rules governing annual additions under § 415(c)(1). The relevant sections of the IRC and Treasury Regulations provide a framework for determining when and how plans should be aggregated for purposes of contribution limits and nondiscrimination testing.Under § 414, various definitions and special rules are provided that relate to the aggregation of employees and plans for the purpose of applying employee benefit requirements. Specifically, § 414(m) introduces the concept of an "affiliated service group," which requires all employees of the members of such a group to be treated as employed by a single employer for the purposes of certain employee benefit requirements. This could potentially include the aggregation of solo 401(k) plans if the businesses involved are part of an affiliated service group as defined under § 414(m)(2) and (m)(5). However, the excerpts do not directly address solo 401(k) plans within the context of affiliated service groups.
The excerpts from § 401 focus on the requirements for a trust to constitute a qualified trust under this section, which is essential for the tax benefits associated with 401(k) plans. These requirements include provisions related to mergers, assignments, and the timing of benefit payments, but they do not directly address the aggregation of solo 401(k) plans.
From § 1.414(b)-1, we learn about the "controlled group of corporations" and how members of such a group are treated as a single employer for purposes including the minimum funding standard and applicable limitations under sections such as § 412, § 4971, and § 404(a). This could imply that solo 401(k) plans maintained by entities within a controlled group might need to be aggregated for certain purposes, but the excerpts do not explicitly cover solo 401(k) plans.TAM 201715001 provides a clear example where the annual additions to a taxpayer's accounts in two different plans (Plan A and Plan B) are required to be aggregated for purposes of § 415(c)(1) due to the application of the controlled group rules under § 414(c). This suggests that if solo 401(k) plans are maintained by entities that are part of a controlled group, the contributions to these plans may need to be aggregated to comply with the annual additions limit under § 415(c)(1).
Notice 96-64 discusses the application of nondiscrimination rules to qualified plans maintained by tax-exempt organizations and provides guidance on the aggregation of entities under § 414(b) and (c). While this notice provides context for the aggregation rules, it does not specifically address solo 401(k) plans.In conclusion, based on the provided excerpts, solo 401(k) plans may need to be aggregated for certain purposes, such as complying with the annual additions limit under § 415(c)(1), if the plans are maintained by entities that are part of a controlled group or an affiliated service group as defined under § 414. The specific circumstances under which solo 401(k) plans must be aggregated depend on the relationships between the entities maintaining the plans and the applicable rules under sections such as § 414(b), § 414(c), and § 414(m). However, the excerpts do not provide a comprehensive answer to all scenarios involving solo 401(k) plan aggregation, and further guidance from the IRC, Treasury Regulations, or IRS notices may be necessary to fully understand the requirements in every situation.
Sources:
§ 414. Definitions and special rules
§ 401. Qualified pension, profit-sharing, and stock bonus plans
Notice 96-64
TAM 201715001
PLR 200205050
§ 1.414(b)-1. Controlled group of corporations.
