What Kind Of Retirement Life You Want For?

What Kind Of Retirement Life You Want For? 5.00/5 (100.00%) 1 vote

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Similar to a 401(k) used at companies across the country, a Solo 401(k) lets small-business owners share the fun and benefits. The business must be very small, however, limited to the owners of the business and their spouses.

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The Solo 401(k) allows business owners to put away more money than a SIMPLE or SEP IRA, and there is some flexibility when it comes to contributions. You can contribute more or less every year, but a maximum of $16,500 for 2009.

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A profit sharing component can also be added to the Solo-K.

“Business owners can add the profit sharing part to maximize contributions to the plan. The employer can make a maximum tax-deductible contribution to the plan of up to 25 percent of compensation,” says Robby Schultz, a financial adviser with the CPA firm, Rollins and Associates.

  • Who can open one: Self-employed business owners with no employees other than a spouse.
  • Cost and complexity: Medium.
  • Employer contribution limit: $16,500 of salary deferral plus 25 percent of compensation, or $49,000, whichever is less, if a profit sharing component is added to the plan.
  • Employee contribution limit: Not applicable.
  • Annual reporting requirements: Yes.