Press Release
Victory Capital Management Enters Market With New Individual(k) Plan
Sole proprietor small business owners can now invest for retirement like their corporate counterparts: through a 401k plan. In the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) that took effect this year, Congress opened the door for sole proprietors to establish 401k plans and increased plan funding limits substantially. Last month, Victory Capital Management, a subsidiary of Cleveland-based KeyCorp (NYSE: KEY), became one of the first firms to offer a product to satisfy this need with its Individual(k) plan.
The Individual(k) enables self-employed business owners to set aside up to 25 percent of income annually as a discretionary, tax-deductible employer contribution. What makes the Individual(k) so attractive is the ability to set aside an additional $11,000 as a pre-tax salary deferral contribution, to a combined annual maximum of $40,000. The salary deferral is above and beyond the 25 percent, making the Individual(k) more advantageous than other retirement plan options such as SEPs, profit sharing plans and defined benefit plans.
"The new tax legislation makes the Individual(k) the best plan for this marketplace," said Michael A. Butler, vice chairman, Business Banking. "Small business owners will be thrilled to know they can now invest more aggressively for the future - sometimes up to twice as much as allowed in the past."
Participants in the Individual(k) plan also benefit from the opportunity to take out loans from the plan, which is not an option under other IRA-based retirement plans. For individuals who have accumulated retirement plan assets in a previous job, starting a business and establishing an Individual(k) gives the business owner the ability to consolidate assets and then borrow against those assets tax-free. Another great benefit is the plan's funding flexibility, which does not require contributions every year.
Qualifying businesses are sole proprietorships that do not have permanent full-time employees other than family members; partnerships, including LLCs; and corporations, including both Subchapter S and C corporations. The ideal candidates for Individual(k) plans are independently practicing attorneys, realtors, accountants, physicians, consultants and independent contractors.
"Unlike many competing plans, Victory Capital Management's Individual(k) has no minimum balance requirement, low administrative costs and more investment options to choose from," said Chris Dyer, Managing Director, Victory Capital Management. "Business owners can choose to invest in more than 500 different mutual funds."
The Individual(k) plan is available by calling Key's Retirement Center at 1.888.KEY.2020, or through any McDonald Investments office.
Victory Capital Management Inc. is one of America's oldest and largest investment management firms. Founded in 1894, Victory Capital Management Inc. manages or advises $71 billion in investment portfolios, including the Victory family of 27 mutual funds. Victory Capital Management Inc. is a subsidiary of KeyCorp, one of the nation's largest bank-based financial services companies, with assets of approximately $81 billion.
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