1.
How do I set up my Self-Employed 401(k) plan?
Fill out and submit a Self-Employed 401(k) Application
Request Form. Each package will include a prospectus that will
provide you with more detailed information about the plan, investments,
sales charges and expenses. Please read the prospectus carefully before
you invest or send money. For more information please Contact Us.
2.
When can I set up my Self-Employed 401(k) plan?
Your Self-Employed 401(k) must be established no later than the
last day of your business's tax year, (i.e. December 31, if you
operate on a calendar year).
3.
Can I start a Self-Employed 401(k) if I already have a retirement
plan for my business?
Yes. You may have to terminate your current plan first before you
establish your Self-Employed 401(k). Check with your tax advisor.
The Self-Employed 401(k) can accept transfers or rollovers from
your current plan, traditional IRAs, and many other retirement accounts
that you may have left with a previous employer.
4.
I have a sideline business; can I have a Self-Employed 401(k) if
I participate in another employer-sponsored plan?
Yes. However, the total contributions per year for all your plans
together cannot exceed the maximum deferrals allowed by law. See
our Calculators section
for assistance in determining the maximum contribution allowed.
5.
Can I have a Self-Employed 401(k) if I own multiple businesses?
The key is whether or not you have employees in any of your businesses.
If you have ownership in more than one business the IRS may view
all your businesses as a single entity for retirement plan purposes.
The Self-Employed 401(k) plans are not designed for businesses with
employees.
6. Can I consolidate my
other retirement funds into my Self-Employed 401(k) plan?
Yes. You may find it more convenient and cost effective to consolidate
your other retirement funds into your Self-Employed 401(k). And,
you'll be able to borrow from your account balance should you ever
need to.
| Accounts |
YES |
NO |
Considerations |
| 401(k) or other retirement with current
employer |
|
 |
|
| 401(k) or other retirement from previous
employer |
|
|
|
| IRA |
|
|
|
| Keogh, SEP-IRA |
|
|
|
| Money Purchase |
|
|
|
| Non Retirement Accounts |
|
|
|
| Profit Sharing Plan |
|
|
|
| ROTH IRA |
|
|
|
| SIMPLE-IRA |
|
|
SIMPLE account must be more
than 2 yrs old |
| Stocks |
|
|
|
|
The above table gives only a general summary
of rollover possibilities. Check with your tax advisor about what
steps apply to your specific circumstances. Please check with your
current custodian to see if you will incur charges for a direct
transfer of your other retirement funds into a qualified 401(k)
plan. After-tax or non-deductible contributions are not allowed.
7. Can I continue to contribute
into my Self-Employed 401(k) plan after having transferred my other
retirement funds to the plan?
Yes. You may contribute to your plan up to the maximum allowed by
law.
8.
How much can I contribute to my Self-Employed 401(k)?
A Self-Employed 401(k) plan allows significantly higher contributions
when compared to other defined contribution retirement plans for
small businesses.
See our Calculators section
for a 401(k) contribution calculator.
If your business is incorporated, the employer contribution is based
on your W-2 income and is contributed by the business. The maximum
employer contribution is 25% of pay. It is not subject to federal
income tax or Social Security (FICA) taxes. The salary deferral
contributions are withheld from your pay and are excluded from federal
income tax but are subject to FICA. Your business receives a tax deduction for both salary
deferral and employer contributions.
If your business is unincorporated, the employer and salary deferral
contributions are based on your net earned income. Contributions
are not subject to federal income tax but are subject to self-employment
taxes (SECA). You receive a tax deduction for both salary deferral
and employer contributions on your Form 1040.
Each owner or spouse that is an employee must receive the same percentage-of-pay
contribution. So if the owner receives a 25%-of-pay employer contribution,
all participants must receive a 25%-of-pay contribution. This rule
does not apply to salary deferral contributions. Each participant
may choose how much to defer. Please consult your tax professional
for advice on the impact of retirement plans on your taxes.
9.
Do I have to make contributions into the plan each year?
No. You have the flexibility to decide from year to year how much
to contribute. For example, one year you may contribute nothing
to your plan and in another year you may contribute the maximum
allowed.
10. What happens if I do not repay the loan on
time?
The outstanding balance of your loan will be considered a taxable
distribution subject to taxes and possible penalty.
11. I have an employee
can I still have a Self-Employed 401(k) plan?
Yes, but only if your employee works for you
less than 1,000 hours per year (which is about 25 weeks or 6 months
based on a 40 hour work week). So, it’s possible for your business
to hire occasional, part-time, or seasonal workers, and still
qualify for the self-employed 401k plan.
12. What happens
if my business grows and I hire employees?
A number of additional IRS requirements must
be met if your plan includes any other employees than you, other
owners, or spouses. If employees are hired you
may have to convert to a plan designed for larger businesses or
face IRS consequences. Thus,
if you have or soon plan to have other eligible employees the
Self-Employed 401(k) is not for you. We can
help you establish a retirement plan more appropriate for your needs.
13. Do I have to pay a
sales charge (load) when taking out a loan?
No. The amount you borrow is not treated as a
distribution, therefore is not subject to a mutual fund sales charge
even if you invested in class B shares with no upfront sales charge.
Consult your prospectus for information on class of shares and their
fees.
14.
What is the interest rate on the Self-Employed 401(k) loan?
Each loan is
set at the Prime Rate as published in the Wall Street Journal on the
business day prior to your loan’s approval. The interest rate remains
fixed for your loan’s duration.
15.
How fast can I get started and take out a loan?
Fill out the Application Request Form now. Once we receive and verify your information (usually the
same day), we’ll send you by email all the forms you will need to open
your 401(k) plan. Complete these forms and mail them to Pioneer
Investments along with your check or your rollover instructions to
transfer your retirement funds of any amount to your new 401k
account. You may request a 401(k) loan from Pioneer as soon as your
funds have been in your 401(k) account for at least 15 days.
For more information please Contact Us. Fill out the Self-Employed 401(k) Application Request Form to receive your free kit. |
