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What is a One-Participant 401(k) Plan?

An individual retirement plan that has been referred to by many names including Self-Employed 401(k), Individual 401(k), Owner Only 401(k) Plans, Solo 401(k), Solo-k, Uni-k, One-participant k and likely a few more names along the way!

 

What are the benefits of investing in One-Participant 401(k) Retirement Plans?   

A great option for the small business owner with no employees, or the business owner and his or her spouse! One-Participant 401(k) Plans have similar characteristics as a sole proprietor Profit Sharing Plan and they are actually traditional 401(k)s with the same rules and requirements as any other 401(k) plan.

One-Participant 401(k) Plans have become a popular alternative to the SEP IRA due to the fact that they allow individuals to save much more money for retirement! Because the self-employed individual plays the role of both the employer and the employee, he or she can make contributions in both capacities!

 

The business owner can actually contribute both:

  • Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit; plus

  • Employer non-elective contributions

In addition, these plans offer flexible contributions, the ability to take loans and the added benefit of low-cost setup. Please view the chart below for more info.

If you are self-employed you may want to consider a One-Participant 401(k) Plan to help meet your retirement plan goals. Give us a call today to see how we may help you meet your retirement savings goals!

  

One-Participant 401(k) Plans

 

Who is eligible?

Self-Employed individuals, owner-only (as well as the owner's spouse) businesses and partnerships

Tax Benefits

Tax-deferred growth, tax-deductible contributions, and pre-tax deferral contributions

Maximum compensation

$265,000 in 2016 and $270,000 in 2017 

This is the Maximum Earned Income amount that contributions (salary deferrals) can be based on

Maximum Contribution

 

Salary deferrals up to:

 
           
 

Year

Under 50 Years Old

 

50 + Years Old

 
           
 

2016

$18,000 +

 

$24,000 +

 
           
 

2017

$18,000 +

 

$24,000 +

 
           

 

Plus Employer non-elective contributions

Total Contribution cannot exceed $53,000 for 2016 and $54,000 for 2017.*

*Not counting catch-up contributions for those age 50 and over

 

Profit Sharing Contribution

Employer/employee can defer up to the lesser of 100% of participant’s annual compensation or:

$543,000 in 2016. (Unless over 50; then $58,000 see Catch-up Contributions)

$54,000 in 2017 (Unless over 50; then $59,000 see Catch-up Contributions)

Maximum participant and employer contributions combined. (You CANNOT exceed this amount!)

Catch Up Contributions*

Salary deferrals up to $5,000 for 2013 allowing a maximum annual deferral of $23,000 $53,000 for 2016 and $54,000 for 2017.

Withdrawals

Must begin by age 70 1/2, 10% Penalty for early withdrawal (Before age 59 1/2), No exceptions allowed

Administrative Filing Requirements

Must file an Annual Form 5500 after plan assets exceed $250,000

Deadline to Establish Plan

December 31st or your firm's fiscal year-end

Solo 401(k)

Fees

Place Trade does not charge any inactivity fees, maintenance fees, set-up fees annual fees. However, Place Trade offers qualified plans in different formats and with a variety of different custodians.  

Please keep in mind that every plan is different.  Potential fees that may be charged by a custodian depend on the specific;

    • type of plan that you hold

    • type of account that it is held in (for example, whether it is held in a brokerage or investment company account) 

    • custodian that is holding your account  

 

Learn more about Individual 401(k) Plans by visiting the official IRS website and please speak with your tax and/or legal advisor before making any tax or investment related decisions.

IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. 

 

Get more info on Retirement Planning for Large and Small Businesses:

 

 

 

To Learn More About the Different Types of Retirement Accounts that we Offer:

Please Call Us at 919-719-7200 Today!

  
 
   

 

 

 

 

Smart Money Move:

 

Open your Individual 401(k) at Place Trade Today!

Individual 401(k) plans are available in two ways through Place Trade: 

If you have your own plan document:

You may open an Investment Trust Account (using the green button below) which is a brokerage account that will allow you to trade stocks, ETFs, options, mutual funds, bonds and more.

 

If you do not have your own plan document:

You may open an investment company fund direct account (where a plan document will be provided for you) and you may invest in a variety of managed mutual funds to help diversify your portfolio. Please speak with your financial advisor for assistance by calling 919-719-7200 today.

 

Make the smart choice and take control of your financial future today!

 

 

 

Call us today at 919-719-7200 or 800-50-PLACE for more information!


Should I cash out my 401(k) retirement account or roll it over?

Related Articles

 

 

For more information on cashing in or taking your money out of your 401(k) or another retirement savings plan please review the official IRS website and visit: Cashing in your 401(k) instead of rolling it over?

(Please be sure to check with your tax and/or legal advisor prior to making any contributions, withdrawals or other changes to your retirement account. Place Trade Financial, Inc. does not offer tax or legal advice and nothing contained herein should not be considered as tax or legal advice under any circumstances.)

 

r Your 401k. 401k roll over Rollover your old 401(k) to a Place Trade Self-Directed IRA or Speak with one of our Experienced Financial Consultants to get Advice on your options or help develop a new financial plan.


Retirement plan specialists are available to help you assess your options and determine which retirement planning strategy best fits your needs.

Changing Jobs? What to Do With an Old 401(k) 

   

Call us today at 919-719-7200 or 800-50-PLACE for more information!

   

Changing Jobs? What to Do With an Old 401(k) 

 

Retirement Planning: Individuals

Traditional IRA Roth IRA Rollover IRAs 401(k) Rollovers

Qualified Plans: Business

SEP IRA

SIMPLE IRA

401(k)

 

  Trade Options | Margin IRA IRA Trading Permissions Get Advice or Trade Online Cashing Out your 401(k) Switching Jobs? View Options From Ramen to Retirement  
 
What can you do with your 401(k) when you change jobs? Get straightforward advice about your retirement plan options so you can make smart decisions! How to Roll Over Your 401k. 401k roll over
  Full-service financial planning and investment advice are available to all of our US clients. Please speak with your full-service financial professional regarding pricing for specific services. Full-Service commissions and fees vary by products, services, and Investment Company. Additionally, full-service commissions are different from and are not included in the deep discount online trading commission schedules listed on this website.  

 

Make smart decisions with your old retirement plans today so that you can maximize your potential and get the most of your financial future!

 

Rollover your old 401(k) to a Place Trade Self-Directed IRA or Speak with one of our Experienced Financial Consultants to get Advice on your options or help develop a new financial plan.


Please be sure to check with your tax and/or legal advisor prior to making any contributions, withdrawals or other changes to your retirement account. Place Trade Financial, Inc. does not offer tax or legal advice. Information provided by Place Trade is for educational purposes and should not be considered as tax or legal advice under any circumstances.

View the General Characteristics of Qualified Profit Sharing Plans & Qualified Money Purchase Plans

Self-Employed 401(k) - Individual 401(k) - Owner Only 401(k) Plans

 

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Learn more about retirement planning by visiting some of the links below:

Roth IRA

SEP IRA

SIMPLE IRA

Traditional IRA

Qualified Plans

Rollover IRAs

Find out how Place Trade can help you get the most out of your college planning by visiting some of the links below:


Coverdell ESA

529 College Savings Plans

UGMA/UTMA Accounts