Self-Employed 401(k) Retirement Plan


Those who are eligible include self-employed individuals and owner-only businesses and partnerships. Owners’ spouses may also participate. Self-employed 401(k) plans provide the opportunity to benefit from tax-deductible contributions and tax-deferred growth, with the added benefit of pre-tax salary deferrals.


Benefits of Self-Employed 401(k) Plans


Investing in self-employed 401(k) plans provides benefits to self-employed individuals and owner-only businesses looking to put aside money now for use during retirement years, while providing the opportunity to recognize potentially substantial income tax savings.  Businesses that are unincorporated can deduct 401(k) contributions from personal income and incorporated businesses can deduct contributions as a business expense.  Benefits of self-employed 401(k)s include:


  • Higher tax savings – Self-employed 401(k) plans generally offer higher tax savings than SEP-IRAs or profit sharing plans, as well as traditional IRAs.

  • Salary deferrals – In addition to the benefit of contributing up to 25% of earned income, a self-employed business owner can also take advantage of a salary deferral option, as well as a catch-up deferral if over the age of 50.  This can greatly reduce current taxable income.

  • Tax-deferred growth – Any potential earnings accumulate tax-deferred.  This means that you are not required to pay taxes on earnings until you withdraw the assets during retirement.


Self-Employed 401(k) Rules


  • Salary deferrals can be contributed in addition to the profit sharing contribution, up to a maximum contribution set by the IRS (in 2015, the max salary deferral is $18,000).
  • Profit sharing contributions can be up to 25% of compensation, up to the annual maximum of $53,000 for 2015
  • Catch-up contributions include additional salary deferral of up to $6,000 for 2015 (if age 50 or older)
  • Withdrawals from self-employed 401(k) plans cannot be made before age 59 ½ (without a 10% early withdrawal penalty), with required minimum distributions starting at age 70 ½.
  • All withdrawals will be taxed at investor’s current income tax rate.

    Contact Us:


    To find out more about opening a 401(k) Self-Employed Retirement Plan, either call our office at (855) 846-ACAP, fill out our brief contact form or email us at [email protected].