Individual 401(k)s (or Solor 401(k)s) are the ultimate plan if you are looking to save the largest amount of money for retirement. They provide much of the same profit-sharing advantages as a typical 401(k). But, Individual 401(k)s provide less complexity and lower costs.
Self-employed who generate income from their business to make contributions to the plan. All business entity types are eligible for this plan. This includes sole proprietors, partnerships, and corporations.
Your business cannot have employees other than yourself, or your spouse. The business owners or partners are considered owner-employees rather than employees. Certain employees are excluded from coverage in the plan. Employees under 21 and employees that work less than 1,000 hours annually are excluded from coverage. Union employees and non-resident alien employees are also excluded.
Individual 401(k) Plan Contribution Limits as of March, 2023. For historical values, please visit IRS Contribution Limits.
Employee Salary Deferral: $22,500
Salary Deferral Catch-Up Contribution (age 50+): $7,500
Employer Profit-Sharing Contribution: Up to 25% of salary of self-employed earning
Total Combined Contribution-Salary Deferral plus Profit Sharing Match (under age 50): $66,000
Total Combined Contribution-Salary Deferral plus Profit Sharing Match (age 50+): $73,500
©Copyright 2020 Midland Trust Company.