Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Nanny & 401k options
Old 05-16-2012, 09:40 PM   #1
Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: California
Posts: 1,002
Nanny & 401k options

My neighbor hit me up with a question that I wasn't sure about, so I figured I would pose it here since it is more 401k based.

He's been interviewing new nannies for the summer. He normally treats them/pays them as a W-2 employee. He pays the employer taxes, FICA, etc. then he also deducts the employee taxes, etc., then nanny gets a net check for the balance.

He never thought about 401k for previous nannies until a potential nanny for this summer. She wants to put all her pay into a 401k until she hits 17k, then receives a paycheck.

Is this possible? Does he deposit it into he Vanguard individual 401k on her behalf and just pay employer taxes. Then after 17k, then nanny's gross wages gets hit for taxes, then nanny gets net pay?

I'm not sure about the process as we never had a nanny. Any suggestions?
Aiming_4_55 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-16-2012, 11:05 PM   #2
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,194
Solo 401k's are for self-employed people, not W-2 employees. If they could work it such that she is an independent contractor the nanny might be able to start one, but I don't think a nanny would typically qualify as self-employed.
Animorph is offline   Reply With Quote
Old 05-17-2012, 04:40 AM   #3
MichaelB's Avatar
Join Date: Jan 2008
Location: Sheltered in place
Posts: 33,192
She could set up a business as a sole proprietor, set up a solo IRA and fund it herself.
MichaelB is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

» Quick Links

All times are GMT -6. The time now is 08:15 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.