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Glossary of Retirement Terms

Featured Stories

A Flexible 401k for the Solo Entrepreneur - Summary: If you're a small-business owner without employees, you're probably familiar with both the exhilaration and travails of going it alone. With a gradually improving economy, more small-business owners may be in a position to defer income this year and next. If you're wondering how to lower your self-employment tax bill, consider a one-participant 401k plan, better known as a "solo 401k," a flexible retirement vehicle with a plethora of advantages to solo entrepreneurs.

Five Reasons to Consider a Solo 401k - Summary: As we move closer to the end of the year those who are self-employed should be thinking about starting a retirement plan for yourself if you don't have one in place already. There are a number of options available; here are five reasons to consider opening a Solo 401k.

The Importance of Updating Your Retirement Account Beneficiary - Summary: For many retirement plan participants, a beneficiary designation might just sound like another confusing piece of retirement plan jargon, but designating a beneficiary is a relatively simple step of setting up your retirement accounts that should not be overlooked.

Understand the Facts About Target-Date Funds - Summary: Target-date funds are supposed to provide simple solutions for people seeking an all-in-one fund that is diversified. Yet, a tremendous amount of confusion surrounds these seemingly basic asset allocation tools. Furthermore, not all target-date funds are created equal so it's essential to first look under the hood if target-date funds are a part of your investment plan for retirement.


401k Plans for Sole Proprietorships

Regulatory reform now allows Sole Proprietorships to set-up and contribute to a 401k plan. These are often called Solo 401k or Individual(k) plans. A number of vendors are beginning to market specific plans to meet this need.

We have put together a list of providers that offer these plans. Click here to obtain a copy of this list.

Calculator available. Click here to calculate how much you can contribute to a Solo 401k in comparison to a SEP or SIMPLE plan which have different limits.

General Features of a Solo 401k Plan:

Plan Establishment Sole proprietors with no additional employees other than the spouse of the proprietor or partnerships whose only employees are self-employed partners and their spouses.
Trustee and Plan Administrator Business Owner, Spouse or Partner or any combination, or any other designated third party.
Salary Deferral
Contributions
Up to $17,500 (not to exceed 100% of pay and no more than $260,000 of pay can be taken into account). Total salary deferral and employer maximum is $52,000.
Catch-up
Contributions
Individuals age 50 or older may contribute an additional $5,500 in salary deferrals beyond the $17,500 which does not count towards the maximum total contribution limit of $52,000.
Employer Contributions Up to 25% of pay (20% for self-employed) to a maximum of $52,000. Salary deferral contributions are also counted towards this limit.
Rollovers Rollovers and transfers allowed from traditional IRA, SEP, Qualified Plans or Keoghs (Profit Sharing, Money Purchase Pension, Defined Benefit), 401k, 403(b) and governmental 457 plans. SIMPLE IRAs are eligible for rollover after two year holding period is met.
Loans Available to all participants, including unincorporated business owners.
Government Reporting IRS 5500-EZ.

 

401k plans are subject to numerous and complex rules, regulations and tax qualification requirements. Be sure to consult with a qualified professional before making any decisions.



Information on Small Business Plans

Starting a small business retirement savings plan can be easier than you think. Here are some resources on a varity of retirement plans available to the small business person.

Employer Retirement Plans Comparison Chart for Small Businesses - Summary: This chart provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus is on the areas that are important to the business owner to ensure that the plan that is chosen is the plan that is most suitable for the business.

Retirement Plan Comparison Chart

IRS Publication 560, Retirement Plans for Small Business.

DOL's 401k Plans for Small Businesses

401k Plans for Small Businesses

Choosing a Retirement Plan for Your Small Business - Summary: In this article you will find a chart outlining the advantages of each of the most popular types of IRA-based and defined contribution plans and an overview of a defined benefit plan.

Retirement Plans FAQs Regarding SEPs

FAQs Regarding SIMPLE IRA Plans

SEP IRA Quick Reference Guide

SEP Retirement Plans For Small Businesses  UPDATED

SEP Vs SIMPLE IRA - Summary: This reference guide provides a comparison of some of the key features and benefits of these plans.

SIMPLE 401k Plans

SIMPLE IRAs vs. Safe Harbor 401k Plans: What Are the differences?  NEW

SIMPLE IRA vs SIMPLE 401k's

Simple IRA Plans for Small Businesses  UPDATED

Best Retirement Plan for Small Business Owners?

Individual Retirement Account is an IRA that provides some tax advantages for retirement savings.


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