Is this tax fraud? Self-employed 401k
Okay, so I own an LLC that makes about $12k a year. I am about to start a job that would mean I don’t have time to keep operating my LLC.
However, my job doesn’t offer a 401k.
I know that because of my LLC, I can set up a self-employed 401k, and contribute as both employer and employee, with my contributions limited to a certain percentage of my LLC’s income.
The tax year is over, so I can’t contribute up to 12k as an employee any more. My new contribution limit this tax year is 0, because my LLC will make zero dollars.
But what if once I start my job, I “subcontract” some of the work to my LLC, giving my LLC income that raises my 401k contribution limits?
Would I have to tell my employer?
This idea feels so simple that it surely must be a form of tax fraud…. Can someone verify?
Posted Sep 8, 2026, 11:42 AM UTC