The 401k Retirement Plan Maximum Contribution is considered one of the highest in the industry. In fact, the Solo k contribution limit is ten times higher than the traditional IRA. The higher the maximum contribution, the bigger will be the savings that a plan participant could make. Thus, it is imperative that you know every important detail about the Individual 401k particularly the annual contribution you need to comply with.
The 401k Retirement Plan Maximum Contribution Must-Knows
As of 2015, the updated maximum contribution limit for the 401k plans for employed is $18,000 for salary deferral options. This amount is applicable to participants who are younger than 50 years of age. For plan owners who are 50 years old and older, an extra $6,000 is allowed as add-on for catch up contribution.
With profit sharing contribution, the total 401k Retirement Plan Maximum Contribution limit is $53,000 for individuals below 50 years old. Plan participants who are qualified for the catch up contribution are allowed to contribute up to $59,000. With such a significantly higher amount, plan owners could enjoy better investment opportunities from their small business retirement 401k savings.
When is the self-directed 401k contribution due?
Plan participants are required to elect what type of contribution they prefer to make, whether salary deferral or profit sharing. Election of contribution should be made by the 31st of December of the current fiscal year. The actual contribution could be made until the next tax-filing deadline which is usually on the 15th of April of the following year.
Why make a timely and prompt contribution?
There are various perks and benefits if you make a timely contribution for the owner-only 401k. Most importantly, you will be able to enjoy the following upsides of the Solo 401 k retirement plan:
- Checkbook Control – Easy and convenient access of the retirement funds for investment.
- Variety of Investment Choices – You have several investment opportunities where you can use your retirement savings and watch them grow.
- Tax Free Transactions – If you rollover your account to the Roth Solo 401k sub account, you are entitled of tax-free earnings, income, and withdrawal.
Complying with the 401k Retirement Plan Maximum Contribution is one of the keys to maximizing your retirement plan. Follow the Individual k rules and watch your money exponentially grow.
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