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People are rushing to complete their 2013 tax year return as well as asking yourself how they can conserve tax obligation for the 2014 tax obligation year. The Solo 401( k) is a strategy that few use. It is made for small business proprietors that have only household staff members. The limit is two individuals, which typically is the business proprietor and also the spouse. The Solo 401( k) is not a new kind of 401( k) strategy and has the exact same policies and also requirements as any other 401( k) plan. Even more details can be discovered on the Internal Revenue Service internet site (1) and search for "Retirement-Plans-One_Participant-401k-Plans".

How much can one contribute? The business owner uses 2 hats in a 401( k) strategy: staff member and company. Payments can be made to the strategy in both capabilities. The owner can choose to delay approximately one hundred percent of settlement (additionally referred to as made earnings for the freelance) approximately $17,500 for both 2013 and also 2014 tax years. If he is age 50 or over, there can be an extra $5,500 (called the "catch-up" contribution) to make the total $23,000 per year.

The second component is the company payment of up to either 25 percent of the payment defined by the plan, typically wages, or a various estimation for the independent person. If the individual is age 50 or over, there can be an additional $5,500 "catch-up" contribution, making the total optimum payment to the Solo 401( k) prepare $56,500 for 2013 and $57,500 for 2014.

Instance of a Set up C, unincorporated small company, where the proprietor is at least age 50 and also the internet revenue in 2014 is $200,000:

If one takes 20 percent of $190,067.85, the maximum company profit sharing payment is $38,013.57. In contrast, the payment limit for a BASIC IRA strategy would be $20,035.96 or $38,013.57 for a SEP Individual Retirement Account plan. One can contribute considerably more to a Solo 401(k) rather of these other 2 employer Individual Retirement Account plans, as well as certainly much even more than the $6,500 limitation for a typical private IRA strategy.

Deadlines: One need to establish your Solo 401(k) plan by December 31, 2014, if you intend to make a contribution for tax obligation year 2014 and also decrease gross income. The contributions need to be funded by your tax-filing due date. If one apply for the 6-month extension prior to the April 15, 2015 target date to file one's 2014 income tax return, one would have up until October, 15, 2015, to make the cash money contribution.


The Solo 401( k) is not a new kind of 401( k) plan as well as has the very same guidelines as well as needs as any various other 401( k) strategy. The company proprietor puts on two hats in a 401( k) strategy: staff member and employer. solo401k.com If the person is age 50 or over, there can be an added $5,500 "catch-up" contribution, making the overall optimum contribution to the Solo 401( k) prepare $56,500 for 2013 and also $57,500 for 2014.

One can add substantially even more to a Solo 401(k) rather of these other two company Individual Retirement Account plans, as well as certainly much more than the $6,500 limit for a typical individual IRA strategy.

Due dates: One need to establish your Solo 401(k) strategy by December 31, 2014, if you want to make a payment for tax obligation year 2014 as well as lower taxed revenue.