The 2015 401 k contribution is one of the top basic things a plan participant should know and understand about the Solo 401k retirement plan. A lot of retirement policies are available in the market such as Traditional and SEP IRA plans. However, there are numerous reasons why the Qualified 401 k plan is a top choice among retirement investors today. Learning the basics of the Individual k retirement policy helps you understand the upsides of establishing this type of plan and how you can jump start your investment.
2015 401 k Contribution Update
According to the 401 k calculator, the current maximum contribution for the Participant-Only 401 k plan is $18,000 for employee salary deferral type of contribution. Plan participants who are 50 years old and older are entitled to boost their contribution and add $6,000 for their catch-up contribution, making their maximum annual contribution of up to $24,000. For profit sharing contribution type, plan participants can contribute a maximum of $59,000, inclusive of the catch-up amount. The 2015 401 k contribution for profit sharing allows the plan to receive 20%-25% of the self-employment compensation.
Additional Contribution (Optional)
According to the 2015 401 k contribution rule, the spouse of the plan owner can also make contribution to the retirement plan as long as he is also earning income from the same source or business. Both the plan participant and spouse can contribute to the plan up to $118,000 yearly.
Loan Option for Eligible Participants
The Solo k retirement plan allows participants to borrow money from their policy up to 50% of the plan’s overall value. The small business 401k retirement plan’s loan option depends on the loan administrator if they are diligent enough to go through the paper works and documentations. Aside from the 2015 401 k contribution, you must also learn and understand the Solo 401 k loan rules. Loan repayment is within 5 years and participants must repay the borrowed amount at least quarterly, in order to avoid penalty. The total amount to repay is Prime Rate + 1% interest. Borrowers have the discretion to use the loaned amount on anything including payment for debts, tuition fees, bills, and many others.
With sufficient knowledge regarding the 2015 401 k contribution, you know how much you can save in order to boost your retirement funds. The good thing about the Owner-Only 401 k policy is that you can use your retirement savings to invest for wealth-building purposes.
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