A tax-deferred retirement plan that offers self-employed individuals and spouses the maximum retirement savings along with a Roth 401(k) option.
- The plan provides self-employed individuals with generous contribution limits.
- Individual 401(k) contributions are generally contributions that are deductible as a business expense and are not required every year.
- You can borrow against your plan assets.
- You are able to roll over or transfer assets from SEP-IRAs, SIMPLE IRAs, and Profit Sharing plans into the pre-tax, Individual 401(k) account.
- Roth Individual 401(k) participants may still have and contribute the maximum allowable amount to a Roth IRA in addition to their Roth Individual 401(k) contributions.
Who Can Establish an Account
Available to any sole proprietor, consultant, or independent contractor.
Investors must meet two requirements:
- Presence of self-employment activity.
- The absence of full-time employees.
- No age or income restrictions.
- Employee Salary Deferrals up to $19,000 in 2019, or $25,000 in 2019 if age 50 or over ($18,500 in 2018, or $24,500 in 2018 if age 50 or over) with a $6,000 catch-up provision if age 50 or older. These salary deferrals can be split between the pre-tax Individual 401(k) account and the after-tax Roth Individual 401(k) account.
- Profit-Sharing Employer Contributions up to $53,000 in 2019, not to exceed 25% of compensation. This discretionary contribution must be made to the pre-tax Individual 401(k) account.
- The total of salary deferrals and profit-sharing contributions cannot exceed $53,000 in 2019; or if age 50 or older, $59,000 in 2019, or 100% of compensation.
- The lesser of up to 25% of the compensation or for 2019, $53,000. (Total allowable profit sharing contribution must be reduced by any employee salary deferrals.)
Free Strategy Session
Are you ready to take the next step with a self-directed IRA?
A free strategy session with our team includes a review of your questions, retirement goals and self-directed IRA account options.