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| Smart New Retirement and Financing Tool for the Small Business Owner |
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Highlights of the Self-Employed 401(k) Plan |
Thanks to new rules from the Tax Relief Act of 2001,
it makes sense for small businesses – whose only employee is the
business owner or the owners and their spouses – to open and
contribute to a Self-Employed 401(k) plan. While most retirement
plans provide a tax break and help save for the future, the
Self-Employed 401(k) offers additional benefits such as:
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Complete contribution flexibility – You decide each year
whether to contribute and how much to contribute.
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Higher contribution limits – Your tax-deferred contributions
can be up to three times as much as what's allowed under some other
types of retirement plans.
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Easy set-up and inexpensive to maintain – Unlike larger
401(k) plans, there are no complicated administrative requirements
to bother with. You can request a free kit online for
quick and easy set-up of your plan.
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Consolidation convenience – You can consolidate assets from
your traditional IRA or other retirement plans into your
Self-Employed 401(k).
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Access to cash via the 401(k) loan option - You can get a
loan of up to the lesser of $50,000 or one-half of your
Self-Employed 401(k) account balance. The loan can be used for any
purpose and the loan is tax free and penalty free as long as it is
paid back on time.
Any type of business with no employees, can establish an individual
401(k) plan – generally referred to as a Self-Employed 401(k), or
Solo 401(k). The business can be brand new or old. It can be a sole
proprietorship, LL.C, partnership, or corporation. See quick video on Self-Employed 401k (4
minutes) |
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| Self-Employed 401(k) Plan |
| Who May Establish |
Anyone who has a business (part or
full-time). Owners and spouses of the owners can be employed by the business.
The business can not have any other employees who work more than
1,000 hours per year. |
| Plan Establishment Deadline |
Business tax year-end. |
| Maximum Contributions |
You decide whether or not to
contribute to your plan in any given year. See our Calculators section for assistance in calculating your maximum allowed
contribution. |
| Rollovers |
You may rollover or transfer
to your Self-Employed 401(k) funds from other retirement
accounts or pension plans - including IRA, SEP, TSP, 457 plan,
and Keogh plans. |
| Loans |
The Self-Employed 401(k) plan
that we offer allows you to borrow up to 50% of your account balance or $50,000,
whichever is less. Repayment period and interest rate are subject
to IRS guidelines. The loan interest rate is fixed at prime at
the time that you borrow. Loans are tax-free and penalty
free as long as the loan is paid back on time. See loan brochure for more
information about Loan Terms. |
| Withdrawals |
Withdrawals other than loans are
taxable and, prior to age 59 ½, may be subject to a 10% penalty
and tax. |
| Administration |
Costs for administration of Self-Employed plans are generally much lower than those for larger 401(k) plans.
Annual IRS 5500 filing is required once plan assets exceed $250,000 (optional filing service available for a fee). |
| Plan Administration Fees |
Several mutual fund companies offer Self-Employed 401(k) type programs. These programs vary in cost and features. The 401k plan that we offer we believe has great value.
Set Up Fee: $0
Trustee Fee: No additional fee
Loan Fee: $100/loan (not per year)
Annual Administrative Recordkeeping Fee *: $0 - $25
*No annual administration fee provided that you maintain an account balance of $25,000 or greater.
Annual administration fee is $25 for accounts with less than $25,000.
IRS 5500 Filing Fee: $250 (needed for plan size over $250,000, you can do it yourself and save that fee)
* Fees are set by the fund company and are subject to change. Please rely only on the documents you'll receive from the mutual fund company for current fees
To request the plan fill out
the Application
Request Form
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| Next Page: FAQs about The Self-Employed 401(K) and
Its Loan Feature |
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| Apply Online APPLICATION REQUEST FORM Apply Online |
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