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Erisa Retirement Plan For Self Employed In Middlesex
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Multi-State
County:
Middlesex
Control #:
US-001HB
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FAQ
participant 401(k) plan is sometimes referred to as a “solo401(k),” “individual 401(k)” or “uni401(k).” It is generally the same as other 401(k) plans, but because there are no employees other than your spouse who work for the business, it is exempt from discrimination testing.
If you decide that a self-employed 401(k) is a good match for your situation, you can set one up through a financial institution that administers 401(k) plans. Because these plans typically involve only 1 or 2 people, they're simpler to administer than a standard 401(k).
When you're self-employed, you can save for retirement with tax-advantaged accounts like a SEP IRA, self-employed 401(k), SIMPLE IRA, or Fidelity Advantage 401(k)℠. An HSA is another potential option for long-term savings, particularly since savings are not use it or lose it and can grow over time.
Yes. Can I contribute to both the Solo 401k and regular 401k plan at the same time? Yes! The Solo 401k has two types of contributions: employee (salary deferral) contributions and employer (profit-sharing) contributions.
The SEP IRA allows you to save 25 percent of your income in the account. In contrast, with a solo 401(k), you can save up to 100 percent as an employee contribution, up to the annual threshold, and then you can flip to employer contributions at up to a 25 percent rate.
There are five main choices for the self-employed or small-business owners: an IRA (traditional or Roth), a Solo 401(k), a SEP IRA, a SIMPLE IRA or a defined benefit plan.
Because you are allowed to be your own plan administrator with the Solo 401k plan, there is no need for the expense or bureaucratic burden of an outside administrator.
Solo 401k plans are not typically classified as standard ERISA plans, because these plans are for business owners only. Solo 401k plans don't include non-owner employees, so there are certain titles of ERISA that don't apply to the Solo 401k.
Check Your Plan Documents: Review your Summary Plan Description (SPD) or other documents. ERISA plans must provide an SPD that clearly states they are an ERISA plan. Look at Employer Contributions: If your employer contributes to the plan or matches your contributions, it's likely an ERISA plan.