contributions are also permitted after the client reaches age 70 A1/2.
Solo 401(k) Plans--A growing number of self-employed individuals with no employees are forsaking the SEP-IRA
for a newer type of retirement plan called the Solo 401(k), or Self-Employed 401(k), mostly for its higher contribution levels.
408(d)(3)(H), the rollover in step two above could consist of any combination totaling $53,000 (for example, $53,000 of her $55,000 traditional IRA balance), leaving basis of $32,000 in her IRAs (in this example, $2,000 in her traditional IRA, $20,000 in her SEP-IRA
, and $10,000 in her SIMPLE IRA).
option would allow them to eventually consider adding employees to the plan, but doing so would subject them to certain nondiscrimination rules that would require that they contribute to the SEP-IRAs
of all employees falling within a certain class.
When first starting out, you may find that a SEP-IRA
or SIMPLE IRA is the most appropriate choice for you.
Higher contribution limits--You can contribute more money to a Solo 401(k) on less income than you can to an IRA, Simple IRA, or a SEP-IRA
Like a SEP-IRA
, a Solo(k) allows a maximum of $50,000 in pre-tax contributions, but offers the additional benefits of enabling account owners to make pre-tax or after-tax investments in an S Corporation and life insurance.
IRS rules stipulate that contributions to each employee's SEP-IRA
can be as high as 25% of compensation or $53,000 for 2015, whichever is less.
is for business owners who want a simple, lower-cost, employer funded retirement plan.
Bastien has a Both IRA and a 401(k), and because he has operated his own IT consulting business since 2004, he is entitled to a SEP-IRA
, which he opened in late 2004.
Five of the providers recommended a SEP-IRA
, SIMPLE IRA or SIMPLE 401(k) and one suggested either a safe harbor or traditional 401(k) plan.
At the same time that the SEP is set up, each employee should set up a SEP-IRA
account at a bank or other financial institution.