A trusted Solo 401 k calculator is a guide for plan participants to determine their maximum contribution limit. The start of a lucrative retirement investment starts with knowing the type of contribution all qualified plan owners could make and how much they can contribute in a yearly basis. Reputable plan providers offer a comprehensive Solo 401 k calculator for the reference of their plan participants for information and guideline purposes.
The Solo 401 k Calculator Reveals
According to the Individual 401k rules, the Solo 401 k limits depend on different factors that may affect the participant’s 401 k plan. For instance, there are basically two types of contribution, the employee salary deferral and the profit sharing component. Plan participants must elect the type of contribution they are to make based on the results from the Solo 401 k calculator. Election of the type of contribution should be made by the 31st of December of the current fiscal year. The actual contribution, however, is allowed until the filing deadline of the following year.
Employee Salary Elective
The salary deferral contribution is funded either with pre-tax or after-tax contribution, also known as the Roth 401k account. Based on the Solo 401 k calculator, the maximum contribution amount for the employee deferral component is $18,000 as of 2015. Plan participants who are 50 years of age or older are allowed an additional catch-up contribution of $6,000.
Profit Sharing Elective
As for the profit sharing component, the type of business the participant owns mainly determines the maximum contribution according to the Solo 401 k calculator. For single member LLC or sole proprietorship business setups, the contribution is 20% of the earned compensation. Multi-member LLC or corporation on the other hand allows 25% contribution from the business compensation. As determined in the Solo 401 k calculator, the combined maximum profit sharing contribution and salary deferral contribution for plan participants over 50 years old is $59,000, as of 2015. If the business owner’s spouse also makes the same contribution to the same plan, the maximum contribution is up to $118,000.
With the helpful and up-to-date guideline from the Solo 401 k calculator, you are 100% sure that you will know how much you can contribute and the amount you can save for your retirement funds. Choose a reputable and proven plan provider that also helps you make wealth-building investments through using your retirement savings to different lucrative investment fields.
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