Individual 401(K)s for the Soloprenuer

That’s right, you can have your own 401(k) plan – even if your business consists of just you, or you and your spouse. An Individual 401(k) plan, sometimes referred to SBO 401(k), offers you opportunities you may not find in other retirement plans.


Individual 401(k)s are designed for the solopreneur. They can have only one or two participants: a business owner, and a business owner’s spouse (provided the spouse works for the business). Accountants, architects, consultants, lawyers, real estate professionals – these are just some of the types of solopreneurs who may quality for Individual 401(k)s.1


Once you reach age 72, you must begin taking required minimum distributions from your SBO 401(k) or other defined contribution plans in most circumstances. Withdrawals from SBO 401(k) or other defined contribution plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.


You may be able to put as much $61,000 into an Individual 401(k) in 2022. If age 50 or over, the limit increases to $67,500. That’s because you can contribute to an Individual 401(k) plan in two ways: as an employee, and as a business owner making a profit-sharing contribution.1


Your total contribution 2022 is capped at $61,000 ($67,500 if you will be 50 or older in 2022).That is, your total employee and employer contributions for the year cannot exceed these annual limits.1


Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice, so make certain to contact your tax, legal or financial professional before making any changes to your retirement strategy.


Individual 401(k) plans are less expensive than other 401(k) plans. While it’s recommended that you keep records of contributions, deferrals, and investment performance, you may not have to file regulatory documents until assets reach $250,000. Your tax, legal or financial professional may be to provide some guidance.1


Can you have an Individual 401(k) if you have an LLC? Yes, you can. You can also have one of these plans if your business entity is a corporation or a partnership. The business structure doesn’t matter, what matters is that the business can have only one or two employees.1


Ask me today about the 401(k) plan that offers high yearly contribution limits, two ways to contribute, and less paperwork and more investment choices than many other small business retirement plans.


If you need to save more for retirement, the SBO 401(k) may be just the retirement plan choice for you.


Call me or email me, and ask me about how you can create a strategy for your business.


1., 2022 The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.