2020 IRA Contributions & Deductions Infographic
Infographic summarizing IRS contribution limits and catch up provisions for retirement accountsLEARN MORE
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The Solo 401(k) (also known as Individual 401(k), Self-Employed 401(k), and Solo(k)) is often the most attractive plan to investors, if they qualify, because it combines elements of the SEP and SIMPLE.
The Individual 401(k) is designed for owner-only businesses and spouses. It can be established by both incorporated and unincorporated businesses, sole proprietorships, partnerships, and corporations.
If you qualify, the Individual 401(k) plan offers higher contribution amounts and possible tax deductions.
Two components comprise the maximum Individual 401(k) plan contribution:
The total annual contribution limit from both sources, for those under age 50, is $56,000 in 2019 and $57,000 in 2020.
The Individual 401(k) is for incorporated and unincorporated businesses, sole proprietorships, partnerships, and corporations. The only requirement for contributions to this plan is that you receive a salary or wage.
The business entity must have no additional employees other than the spouse of the proprietor—or, in the case of a partnership, the only employees must be self-employed partners and their spouses.
An Individual 401(k) plan must be the only arrangement maintained by the business that is not included as part of a controlled group under federal tax law.
The deadline for establishing an Individual 401(k) plan is the last day of your business’s tax year (December 31, for a calendar tax year).
However, if your business is incorporated, you may want to establish an Individual 401(k) plan early in the tax year to make employee salary deferrals based on the Form W-2 income throughout the year.
This is necessary because you may not defer on compensation that is paid to you from your corporation before you establish the Individual 401(k) plan.
If you’re interested in opening a Solo 401(k), or for more information about this plan, please contact a Senior Account Executive at 855.265.4472.
In this session, you’ll learn about:
IRA Contribution Limits, Catch Up Provisions and Contribution Deadlines