Download application Individual(k) forms for an LLC

Download application Individual(k) forms for an S-Corp and a C-Corp

Who can open an Individual 401(k)?

The Individual 401k is the newest and most exciting retirement plan to benefit the self employed, thanks to the recent tax law created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This tax law became effective beginning January 1, 2002 and provides significant advantages to small businesses whose only employee is the owner or the owner and their spouse. These self employed business owners can establish an Individual 401k plan and take advantage of this powerful retirement savings tool.

What makes the Individual 401k unique is that compared to other self employed retirement plans greater contributions may be made at identical income levels, therefore maximizing retirement contributions and valuable tax deductions. 2009 Individual 401k contribution limits are $49,000 a year ($54,500 if age 50+). Also, an Individual 401k allows the flexibility to borrow against the value of your 401k. Tax free loans (up to 50% of the total 401k value with a $50,000 maximum) are permitted in an Individual 401k plan.

Self employed business owners with no W-2 employees may be well suited for an Individual 401k if their objective is to maximize their retirement contributions or if they would like to borrow from their retirement plan using their 401k balance as collateral via a tax free Individual 401k loan.