What is a One-Person (Solo) 401(k) Plan?
If you are self-employed, rule changes contained in the 2001 tax bill may make a one-person 401(k) plan a viable alternative, as compared to other retirement plans, for small businesses. The solo 401(k) plan is suitable for any business owner who has no employees other than co-owners or spouses. You may work as an independent contractor with 1099 income, freelancer, sole proprietor, or in a partnership, Limited Liability Company (LLC), or corporation. Small business owners can establish an individual 401k and transfer their IRA, 401k, 403b, or other qualified retirement funds into the new individual plan. The principal reason you might want to consider a one-person 401(k) plan is it may offer higher contribution limits versus other retirement plans available for small businesses. In this regard, the two most significant changes contained in the 2001 tax bill with respect to retirement plans were: 1) Raising the total contribution limit, including employer profit sharing and/or matching
