There is just no question that the contribution limits 401k is the biggest in today’s retirement plan industry. According to renowned policy administrator and provider, Sense Financial, the maximum annual contribution to 401k is the most lucrative and biggest in today’s retirement policy market. The bigger the annual maximum contribution means the bigger the savings and funds accessible for plan owners to utilize for lucrative investments. This is exactly why more and more individuals are switching to the Solo 401 k.
All about Contribution Limits 401k
Knowing how 401k works is as important as knowing the maximum contribution limits 401k on a yearly basis. There are various points to learn and understand with the Individual 401 k retirement policy. Here are some of the must-knows about the Owner-Only 401k contribution:
- The deadline for the retirement plan contribution is mainly depending on the type of business the plan owner possesses. For instance, there are three different business types which could determine the maximum contribution and deadline of the plan holder:
- Sole proprietorship
- Single-member or multiple member LLC
- C or S Corporation
- For the employee deferral sole proprietorship contribution limits 401k, the owner who is under 50 years of age could make a maximum annual contribution to the Solo 401 k retirement account of as much as $17,500. This updated amount is for the year 2013. For plan owners who are 50 years old and older, an additional $5,500 annual catch-up is allowed. The overall annual contribution for qualified members is $23,000 yearly.
- According to administrators and the Self-Directed 401 k retirement plan, the actual maximum contribution could however be made using the Roth sub account where plan owners could take advantage of the after-tax contribution. This helps contributors enjoy tax-free contribution.
What is Profit Sharing Contribution?
Aside from the contribution limits 401k, it is also essential to learn about the profit sharing contribution. Plan holders could make their yearly profit-sharing contribution to the Individual 401 k retirement policy on behalf of their spouse or the business owner himself. According to the Internal Revenue Code Section 401, the contribution is limited to 25% of the income of the business. Profit-sharing contributions may not exceed up to $56,500 in yearly contribution.
With the huge maximum yearly contribution limits 401k, plan owners could enjoy the biggest savings for their retirement plan. The Solo 401 k account is no doubt the most beneficial.