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Solo 401(k) 2013 Deadline Fast-Approaching

12/20/2013:

There is an important deadline for owner-only businesses that want to save on taxes this year and at the same time have money set aside for retirement. Solo 401(k)s, also called Individual 401(k) plans, enable owners to tax-defer up to $51,000 in taxes for 2013 or $56,500 if you are at least 50 years of age. This can be a significant tax savings for this year and may even lower you a tax bracket. Any business without employees, even those with multiple owners, can start a Solo 401(k). Spouses may also be included in the plan.

Must Purchase a Plan Now to Have until Your Tax Deadline to Save on 2013 Taxes

Individual 401(k) plans, which are for the self-employed or any multiple owner business that does not have any employees, must be setup by December 31, 2013 to receive tax benefits. The good news is that you’ll have until your tax filing deadline (April 15, 2014 for most; March 17 for S and C corps) to make profit sharing contributions into your 401(k) and still receive the tax benefits for 2013.

ShareBuilder 401k has one of the latest deadlines to buy and setup your plan that qualifies for 2013. You can purchase and complete the online setup by December 31st at 11:59 Eastern and still qualify. There is a nominal expeditor charge for plans purchased from December 26th through December 31st. ShareBuilder 401k offers a Solo 401(k) plan that has a one-time set-up fee of $150 and as much as a $15-a-month service charge for ongoing administration of the plan. For those that buy before the deadline and roll-in over $50,000 from a qualified account (old 401(k) account or qualifying IRA) the set-up fee is waived; at $250,000, there are no fees for set-up or ongoing administration. Those that also set-up a plan and contribute $5,000 or more by year-end may receive a $25 gift card. It only takes 4-5 minutes to get a quote and purchase a ShareBuilder 401k and another 10 minutes to setup your plan online.

You’ll Have Access to Roth 401(k) and Loan Options Too

Individual 401(k) plans also allow you to make Roth contributions during the calendar year (but Roth contributions are not valid for the previous year if made post December 31st). With a loan through your 401(k) plan, you can always access half of your money up to $50,000 penalty-free in case of an emergency and you pay it back to yourself.

Paying yourself first is a great way to receive a gift that can keep on giving for years to come.

Happy Holidays!

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