Owner Only Plans

 
 

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.

Discretionary Funding

Contributions are discretionary and can be increased, reduced, or eliminated as needed each year.

Higher Contributions

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 Plans

Consolidate balances from other plans, including other SEPs, Rollover IRAs, and other employer retirement plans.

Tax-Free Loans

Borrow 50% of your balance (up to $50,000) tax free if repaid according to IRS Regulations.

Pre-Tax or Roth

Contributions can be funded on a pre-tax basis or as Roth contributions for tax-free withdrawals at retirement.

Flexible Investments

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:

CONTRIBUTION SOURCE ANNUAL LIMIT DETAILS
Salary Deferral $19,500 Contribute up to $19,500 as a pre-tax or Roth contribution.
Catch-up Deferrals $6,500 Participants age 50 or older during the plan year can contribute an additional $6,500.
Profit Sharing 25% of Compensation The employer can make an additional contribution up to 25% of Earned Income.
Total $63,500 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.

 

Getting Started

Setting up a SOLO 401(k) Plan with JULY is quick and easy. Below are the steps to setting up a plan.

1

REQUEST A PROPOSAL

Click to complete the Online Proposal Request Form below or call our Sales Team at 888-333-5859.    Request Proposal

2

COMPLETE SETUP FORM

We will provide you with a Setup Form used to create your plan document. This should be completed by someone with knowledge of the company’s legal and ownership structure.

3

SIGN AGREEMENT / PAY SETUP FEE

Sign the service agreement included with the Setup Form and return it to JULY along with the Setup Fee requested. This will authorize us to begin the setup of your plan.

4

SIGN PLAN DOCUMENT

JULY will prepare and send a plan document for signature. Please allow 7 to 14 days for preparation of the plan document. It must be signed by the company owner before year-end.


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.

1

ESTABLISH INVESTMENT ACCOUNT

Work with your financial consultant to set up the plan’s investments. IMPORTANT: Coordinate with your financial consultant so JULY receives duplicate account statements.

2

PROVIDE YEAR-END INFORMATION

When it is time to fund the plan, JULY will request your annual compensation information and other compliance-related questions to calculate allowable contributions.

3

JULY CALCULATES CONTRIBUTIONS

Before funding contributions, JULY will calculate the maximum amount to ensure you do not exceed IRS limits. Review these reports before making contributions.

4

FUND THE PLAN

After reviewing the contribution reports, work with your financial consultant to fund contributions to the plan. Click here for contribution funding deadlines.

 

Setup and Ongoing Costs

Costs for setting up and operating a SOLO 401(k) Plan are listed below.

Fee Details Amount
CORE FEES
Initial Setup Fee To Setup the Plan and Prepare Plan Documents $75
Annual Fee (Per Participant) Per Participant Fee for Annual Contribution Calculations and Source Accounting $350
OTHER FEES
Form 5500-EZ (if needed) Needed When Plan Assets Reach $250,000 $150
Termination Fees To Assist with Terminating the Plan $250
Special Consulting Services Additional Consulting Time – Annual Fee Includes up to 2 Hours $150 / Hour
Loan Initiation To Prepare Loan Paperwork $100 / Loan
Annual Loan Accounting To Track Loan Repayments Per the Amortization Schedule $50
Note: Core Fees are paid via ACH Debit or via Credit Card on a monthly basis.