The Small Business 401 k pension plan is the top choice if you want to keep your hard-earned money secured and productive at the same time. This is only possible if you follow the Individual 401k rules and set up your retirement account with the trusted plan provider, Sense Financial. There are numerous plan administrators out there but only established companies such as Sense Financial could help plan owners maximize their pension plan and exponentially grow your money using your retirement savings.
Maximum Contribution for the Small Business 401 k
It is imperative that you have full knowledge and fully understand the Individual 401k contribution limits. The pension plan has the highest maximum contribution on a yearly basis which is ten times higher than any other retirement plans. It’s actually a benefit of Solo 401k that there is no minimum contribution required. If plan owners don’t want to or cannot afford it, they can contribute as little as they want, even suspend contribution for that year, with no consequence.
For the Small Business 401 k, your annual maximum contribution is $57,500. For a detailed list of this annual contribution, the yearly employee elective deferral is $17,500 particularly plan owners who are below 50 years old. However for plan holders who are 50 years of age and older, an additional $5,500 catch up contribution is allowed. Moreover, a 20% profit sharing contribution from businesses which are sole proprietorship or single member LLC in nature is required while multi member LLC businesses must have 25% profit sharing contribution.
The Eligibility Rules
When you say Small Business 401 k, the business owner is required to not have fulltime workers employed in his company except for the owner and his spouse. Otherwise, you will not be fully qualified and eligible to set up or establish the Self-Directed 401 k pension plan. Another qualification is for the plan applicant to prove his self-employment activity where he must have proof of working as a consultant or independent contractor. Does this mean you cannot work fulltime? Plan owners could still work as a fulltime employee as long as he can prove that he has income from self-employment activities.
With all the upsides and benefits of the Small Business 401 k, setting up an Individual k account is a no-brainer. If you are looking for a remarkable pension plan which could help you secure your finances in the future and help you grow your retirement savings, the Solo 401k account is a great choice.