Who adopts an Individual 401(k) Plan?
Sole Proprietorships and companies with no employees other then the owners spouse can establish an Individual 401(k) plan. Business owners that want low administrative costs and also want to allow for high contribution limits will choose to adopt an Individual 401(k) plan over a SEP, SARSEP or traditional IRA. Contributions to an Individual 401(k) plan are discretionary. Highlights: If you establish an Individual 401(k) plan, you: Can have other retirement plans. Need to annually file a Form 5500 if the plans assets exceed $100,000. Pros and Cons: Greater flexibility in contributions. Employees may contribute more to this plan than under IRA plans. Good plan if cash flow is an issue. Optional participant loans and hardship withdrawals add flexibility for employees. Need to test that benefits do not discriminate in favor of the highly compensated employees. This testing can be complicated. Additional withdrawal and loan flexibility adds administrative burden for the employer. Who Contri
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)?
