Regulatory reform now allows Sole Proprietorships to set-up and contribute to a 401k plan. These are often called Solo 401k or Individual(k) plans. Please contact us to help you with your specific plans to meet this need.
We can help you to make a better decision to calculate how much you can contribute to a Solo 401k in comparison to a SEP or SIMPLE plan which have different limits.
General Features of a Solo 401k Plan:
Plan Establishment: Sole proprietors with no additional employees other than the spouse of the proprietor or partnerships whose only employees are self-employed partners and their spouses.
Trustee and Plan Administrator Business Owner, Spouse or Partner or any combination, or any other designated third party.
Salary DeferralContributions Up to $16,500 (not to exceed 100% of pay and no more than $245,000 of pay can be taken into account). Total salary deferral and employer maximum of $49,000.
Catch-upContributions Individuals age 50 or older may contribute an additional $5,500 in salary deferrals beyond the $16,500 which does not count towards the maximum total contribution limit of $49,000.
Employer Contributions Up to 25% of pay, (20% for self-employed) to a maximum of $49,000. Salary deferral contributions are also counted towards the $49,000 limit.
Rollovers Rollovers and transfers allowed from traditional IRA, SEP, Qualified Plans or Keoghs (Profit Sharing, Money Purchase Pension, Defined Benefit), 401k, 403(b) and governmental 457 plans. SIMPLE IRAs are eligible for rollover after two year holding period is met.
Loans Available to all participants, including unincorporated business owners.
Government Reporting IRS 5500-EZ.