Is a Self Employed 401k Plan Right For You?
The Self Employed 401k Plan is also know as an Individual or Solo 401k plan. It is an exciting retirement plan for the self employed, thanks to the tax law created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This tax law became effective beginning January 1, 2002 and provides significant advantages to small businesses whose only employee is the owner or the owner and their spouse. These self employed business owners can establish an Individual 401k plan and take advantage of this powerful retirement savings tool. The Individual 401k is unique because compared to other self employed retirement plans greater contributions may be made at identical income levels, maximizing retirement contributions and tax deductions. 2010 Individual 401k contribution limits are $49,000 a year ($54,500 if age 50+). Also, an Individual 401k allows the flexibility to borrow against the value of your 401k. Tax free loans (up to 50% of the total 401k value with a $50,000 maximum) are permitted in an Individual 401k plan. Information provided by Internal Revenue Service - Department of the Treasury
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