Individual 401(K) Retirement Plan
The individual 401(k) plan is a type of 401(k) plan, as the name denotes, designed specifically for owner-only coverage. While you’ll find these plans marketed under a number of different names (Individual(k), Uni-K, Solo-K, Owner-Only 401(k)), the common characteristic is that these names are used to denote a 401(k) product that is designed specifically for the “owner-only” market.
Feature |
Summary |
Details |
---|---|---|
Employer Eligibility |
Restricted |
Only appropriate for businesses that qualify for |
Maximum Age Restriction |
Age 21 |
Potentially viable for business with common-law employees if all are under age 21 |
Maximum Service Restriction |
1 Year of Service |
Potentially viable for business with common-law employees if employees work less than 1000 hours/yr. |
Annual Notifications/Reporting |
Form 5500-EZ |
Must file Form 5500-EZ with IRS/DOL once plan assets reach $250,000 (and last plan year regardless of assets) |
Funding Options |
Employer and Employee |
Maximum contributions typically achieved through combination of profit sharing and employee deferral |
Maximum Contribution (2016) |
$53,000 $59,000 (age 50+) |
Ability to achieve maximum funding is dependent on business owner’s level of compensation |
Special Features |
Plan Loans Higher Funding |
May afford advantages not available through SEP or SIMPLE IRA (e.g., plan loans, higher funding) |
Withdrawal Restrictions |
Yes |
Typically not distributable prior to death, disability or separation from service or plan termination |