|
| Retirement Contribution Limits |
Tax Year 2008 |
Tax Year 2009 |
| Elective salary deferral / annual contribution limits: |
| Solo 401(k), Roth 401(k), 403(b), and federal Thrift Savings Plan |
$15,500 |
$16,500 |
| Solo-401(k), 403(b), and SEP IRA plans total annual employer + employee contribution limit - (Section 415 limit): |
$46,000 |
$49,000 |
| Extra "catch-up" contribution limit allowed for individuals age 50 or older: |
| * 401(k) plans, 403(b) plans, and Roth plans |
$5,000 |
$5,500 |
| No "catch-up" available for SEP or Keogh plans |
|
|
| IRA contribution limit (traditional and Roth IRAs): |
$5,000 |
$5,000 |
| * IRA "catch up" |
$1,000 |
$1,000 |
|
| |
How much can you contribute to your 401(k)?
The 401(k) is a flexible retirement plan that allows contributions from:
- Salary deferral (employee contribution),
- Profit sharing (employer contribution), or
- A combination of both.
A self-employed 401k owner can contribute as the employer, the employee, or as both. Contributions to the 401k are discretionary which means you elect to contribute or not.
Maximum Total 401(k) Contribution - Contributions cannot exceed 100% of earned income and they can be made as soon as the income has been earned.
Roth 401(k) Contributions
The Self-Employed 401K plan we offer allows you to place a portion or all of your salary deferral contribution into a Roth section of your 401(k) or 403(b). Contributions to the Roth section are from after-tax income, so these contributions do not reduce your taxes immediately. However, unlike other retirement plan contributions, Roth distributions including earnings are tax-free provided certain requirements are met.
Maximum Profit Sharing Contribution
- (For unincorporated business, income is generally your net business profit from Schedule C, Schedule C-EZ, Schedule F, or Schedule K-1 of your Form 1040. For a corporation or subchapter S, income would be total wages as reported on IRS Form W-2). The profit sharing contribution is not counted taxed as income to you and is a business expense that reduces your business' taxable income.
Feel free to use the Self Employed Owner Only Calculator as a contribution guide.
What is the deadline for you contribute to your 401(k)?
Salary deferrals contributions - For W-2 wage earners, salary deferrals to your self-employed 401(k) account must be made by the last pay period of the calendar year for which the deduction is made. For unincorporated business owners salary deferrals can be made until your tax-filing deadline plus any extensions.
Profit sharing contributions - You can contribute to your self-employed 401(k) for a tax year up to the time of your company's tax filing deadline for that tax year, including any extensions.
Please consult with your tax advisor regarding your contribution amount and deadline before making any financial commitments regarding the items discussed here. |
|
|
