What is an individual 401(k) plan?
An individual 401(k) plan is a regular 401(k) plan combined with a profit-sharing plan. However, unlike a regular 401(k) plan, an individual 401(k) plan can be implemented only by self-employed individuals or small business owners who have no other full-time employees (an exception applies if your full-time employee is your spouse). If you have full-time employees age 21 or older (other than your spouse) or part-time employees who work more than 1,000 hours a year, you will typically have to include them in any plan you set up, so adopting an individual 401(k) plan will not be a viable option. Note: An individual 401(k) plan isn’t really a different kind of 401(k) plan. Rather, it simply takes advantage of the fact that relaxed rules apply when the only individuals who participate in the plan are the owner and the owner’s spouse.
Related Questions
- How do I convert my Profit Sharing Plan to a Principal Trust Individual 401(k)? What forms do I need to fill out and send?
- How do you convert a Profit Sharing Plan with another trustee to a Principal Trust Individual 401(k)?
- What are the costs to convert a Profit Sharing Plan to a Principal Trust Individual 401(k)?
