Owners Only 401(k)

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Owners Only 401(k)

As the name implies, this plan is only for businesses with one employee, the owner! This plan offers the high contribution limits and flexible investment strategies of a traditional 401(k) to owner-only businesses.

This type of retirement savings plan is appropriate for individuals who are the sole operators of their businesses. It may also be appropriate for those who share ownership and responsibility with family members or with partners, as long as those individuals each own at least 5% of the business. The owners-only 401(k) is available to business entities including sole proprietorships and partnerships, as well as C, S and limited liability corporations.

In addition to the benefits of traditional 401(k) plans – including tax-deductible contributions, tax-deferred earnings, flexible contribution requirements and a variety of investment options – and the higher funding limits, owners-only 401(k) plans offer:

  • Catch-up contributions – if you are over 50 you can make additional contributions
  • Tax-free loans – there is a provision that allows for to borrow the funds if needed
  • Consolidation of multiple accounts – most retirement plan assets can be transferred in
  • Spousal benefits – your spouse may participate if they are employed by the business and receive compensation
  • Roth contribution are allowable

To learn if this plan is right for your business – contact us!