I own my own company. I am maxing out my roth 401k with a match of 4%. Can hire my wife and pay her just enough to max out another roth 401k?

  • You should talk to your accountant. Not the right subject for internet advice. However, it sounds reasonable provided adherence with plan rules.
    – Pete B.
    Sep 5 '17 at 11:37
  • 4
    She probably has to actually work for her pay and you can't just pay her for nothing. I asked a similar question not too long ago: money.stackexchange.com/questions/81311/…
    – gaefan
    Sep 5 '17 at 11:50
  • 5
    How many employees do you have? Do you know that a solo 401 has a limit far higher than $18K? Sep 5 '17 at 12:24

I don't know the real answer to your question, but assuming she is homemaker or unemployed, you can open a Spousal IRA for her with the same contribution limits, e.g. $5,500 in 2017. This would be a lot easier than possibly committing tax fraud. I was able to do this for my wife a few years ago with an online investment company.

  • 2
    Just a guess, but it seems likely that OP makes too much money for a spousal Roth IRA, or to deduct the traditional IRA.
    – TTT
    Sep 6 '17 at 2:32
  • I did not know there was a limit. It seems to be $186K for 2017; a problem I have not been blessed with. Sep 6 '17 at 10:23
  • @AaronD.Marasco - at that level, no IRA, AMT kicks in, no Rental Real Estate deductions for passive investors. It's a nightmare. Sep 6 '17 at 14:51

Legitimate periodicals have written over the years how business owners can shift income to family members. To a spouse to do exactly what you are looking for, and to children, whose earned income is taxed at their rate.

As long as the work is documented and reasonable, e.g. I couldn't pay my 10 year old $50/hr to help file, your approach is sound.

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