Custom Plans for Owner-Only Businesses
Accelerate Savings, Reduce Taxes
Simple, Straightforward Setup
Knowledgeable Client Service
A 401(k) Plan exclusively for owner-only businesses.
Benefits of a SOLO 401(k) Plan
SOLO 401(k) plans offer a number of benefits to owner-only businesses compared to other types of plans.
Contributions are discretionary and can be increased, reduced, or eliminated as needed each year.
Fund up to $63,500 ($57,000 if less than age 50) which is higher than other plan designs such as SEPs and SIMPLEs.
Consolidate balances from other plans, including other SEPs, Rollover IRAs, and other employer retirement plans.
Borrow 50% of your balance (up to $50,000) tax free if repaid according to IRS Regulations.
Contributions can be funded on a pre-tax basis or as Roth contributions for tax-free withdrawals at retirement.
Work with your advisor to establish mutual funds, ETFs, or investment in a brokerage account for more options.
What is the Maximum Contribution?
Business owners can contribute up to $57,000 annually, or $63,500 if age 50 or older, not to exceed 100% of the owner’s compensation. There are three types of contributions that make up the total contribution limit:
||Contribute up to $19,500 as a pre-tax or Roth contribution.
||Participants age 50 or older during the plan year can contribute an additional $6,500.
||25% of Compensation
||The employer can make an additional contribution up to 25% of Earned Income.
||All three contribution sources cannot exceed $63,500 ($57,000 if less than age 50).
In calculating the annual limit, the plan must use the owner’s Net Earned Income as a definition of compensation. For corporations, this is generally the same as W-2 Income, but for Sole Proprietors and Partnerships, this requires a special calculation and may be lower than that reported on tax documents.
Setting up a SOLO 401(k) Plan with JULY is quick and easy. Below are the steps to setting up a plan.
Funding the Plan
Once the plan document is signed, you can begin funding the plan. It is important not to make contributions before the plan document is completed and signed as these amounts would not constitute tax-qualified contributions.
Setup and Ongoing Costs
Costs for setting up and operating a SOLO 401(k) Plan are listed below.
|Initial Setup Fee
||To Setup the Plan and Prepare Plan Documents
|Annual Fee (Per Participant)
||Per Participant Fee for Annual Contribution Calculations and Source Accounting
|Form 5500-EZ (if needed)
||Needed When Plan Assets Reach $250,000
||To Assist with Terminating the Plan
|Special Consulting Services
||Additional Consulting Time – Annual Fee Includes up to 2 Hours
||$150 / Hour
||To Prepare Loan Paperwork
||$100 / Loan
|Annual Loan Accounting
||To Track Loan Repayments Per the Amortization Schedule
Core Fees are paid via ACH Debit or via Credit Card on a monthly basis.