Ideal for accountants, attorneys, dentists, entrepreneurs, physicians, real
estate brokers, consultants, contractors and other self-employed individuals
- Shelter your profits for retirement while saving money with an affordable
401(k) plan
- Focus on running your business with our convenient, low maintenance plan
- Get started quickly with fast online plan setup
- Benefit from higher contribution limits
- Determine the
profit-sharing
funding you want
- Customize a plan to suit your business with our flexible plan design
Frequently Asked Questions
- Q. Who can use an Individual 401(k)?
-
A. An Individual 401(k) is designed specifically for businesses that either do not
employ any common law employees or that employ only common-law employees who may
be disregarded for purposes of federal qualified plan coverage requirements. Generally,
any business or enterprise that employs only the owner(s) and/or spouse(s) of the
owner(s) can utilize the Individual 401(k). These businesses include:
- Q. What if I have ownership in more than one business?
-
A. You may have to include all businesses under one business retirement plan (depending
on whether the
business constitutes a “controlled group,”
as defined under section 1563 of the Internal Revenue Code).
- Q. What are the contribution limits?
-
A. Plan contributions cannot exceed the lesser of
$50,000
or 100% of compensation. Employee deferrals are limited to
$17,000
(employees age 50 and over can contribute an additional
$5,500
).¹ The employer contribution limit is 25% of compensation.¹
- Q. Are rollover contributions allowed?
-
A. Yes, rollovers and transfers are allowed from most other tax-deferred retirement
plans, including Keoghs, defined benefit
plans, deductible and conduit IRAs, SEPs,
401(k)s, profit sharing and
money purchase
plans, SIMPLE IRAs after two years of SIMPLE participation and
403(b)
and governmental 457 plans.
- Q. What is the deadline for funding an Individual 401(k)?
-
A. The deadline for funding the profit sharing portion is the business's tax return
due date, including extensions. The deadline for depositing employee salary deferrals
depends on whether or not the business is incorporated.
- Q. What is the deadline for an employee salary deferral election?
-
A. Owners of an unincorporated business (i.e., sole proprietor or partner) must
generally make a written employee salary deferral election (including amount) by
no later than the last day of their tax year. If a business is incorporated, it
must generally make a written employee salary deferral election (including amount)
before the compensation is currently available or paid.
- Q. Can personal loans be taken against the Individual 401(k)?
-
A. Yes, incorporated and unincorporated business owners are eligible to take personal
loans from qualified plans.
- Q. What types of employees can generally be excluded from the Individual 401(k)?
-
A. Generally, under federal law you are permitted to exclude the following types
of employees from coverage under a 401(k) plan, such as the Individual 401(k):
- Employees under age 21
- Employees with less than one year of service
- Employees who work less than 1,000 hours per year
- Certain union employees
- Certain nonresident alien employees
¹
2012
limits. Limits are indexed annually.
This information does not constitute tax advice. Please consult your tax adviser
for specific tax information.