Self Employed 401k Plan
Self Employed 401k plans are rapidly becoming the self employed retirement plan of choice due to this plan’s advantages and benefits. Self Employed 401k plans are available to self employed individuals and to business owners with no full time W-2 employees other than a spouse.
Sole proprietorships, partnerships, subchapter S corporations, C corporations and LLCs qualify for the Self Employed 401k plan.
Benefits of the Self Employed 401k Plan
- Self Employed Loans are permitted with a Self Employed 401k up to a maximum of $50,000. IRS rules do not allow loans with IRAs, SEP IRAs, or Keogh plans.
- Self Employed 401k Contribution Limits - $49,000 in 2011 or $50,000 in 2012 ($54,500 in 2011 or $55,500 in 2012 if age 50 or older.
- Flexible Annual Contributions - Self Employed 401k plan contributions can be increased or decreased or stopped on a year by year basis.
- Tax Deductible Contributions - In general, contributions into Self Employed 401k plans are 100% tax deductible.
- Tax Deferred Growth - Contributions and investment earnings grow tax deferred. After age 59 1/2 withdrawals can be withdrawn without penalty. Federal and state taxes if applicable will apply.
- Self Employed Roth 401k - There is an option to make Roth 401k contributions with the salary deferral portion of the Self Employed 401k. Contributions into a Self Employed Roth 401k are not tax deductible, but withdrawals are tax free after age 59 ½.
Learn more about the Self Employed 401k plan.