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.
- Salary deferrals up to $18,000 in 2018 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 2018, 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 2018; or if age 50 or older, $59,000 in 2018, or 100% of compensation.
- The lesser of up to 25% of the compensation or for 2018, $53,000. (The dollar figure must be reduced by any employee deferrals made to the plan.)
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