Archive for May, 2010

Solo 401K

Posted on May 12, 2010. Filed under: Healthy Living |

If you are a Sole Proprietor, Independent Contractor, or a Business Owner with no employees (other than family members) we would like to introduce you to the Solo 401K.  The Solo 401K is a great way for those business owners looking to diversify their investment opportunities.

The following information has been provided by Melissa Conder at


Executive Summary

The Solo 401k is a Profit Sharing/401(k) plan designed for the sole proprietor, independent contractor, or business owner with no employees (other than family members). This plan allows such businesses the opportunity to maximize tax-deductible retirement contributions, without giving up access to or control of their assets.

Key benefits of owner-only 401k plans:

  • Permit pre-tax salary deferral contributions.
  • Permit discretionary profit sharing contributions.
  • No IRS Anti-Discrimination Testing.
  • All accounts are 100% immediately vested.
  • Tax-Free loans are available (up to 50% of account value, up to maximum of $50,000)
  • Distributions are governed by the plan document and may be restricted.1

Who can establish?

  • Sole Proprietors
  • Independent Contractors
  • Any small business with all related employees (i.e., only family members)
  • Any partnership with no W2 employees (i.e., owners only)
  • Family offices2

Annual contributions:

  • Defer up to $16,500 ($22,000, if age 50+), through payroll deductions.
  • Elective employer contributions, up to 25% of profit (max $49,000/year).
  • Maximum eligible compensation: $245,000.3

[Note: Deferrals and employer contributions cannot exceed the lessor of 100% of each employee’s compensation or $49,000 per employee. Catch-up deferrals are not considered in this limit. ]

Key benefits of a Solo 401k:

  • Online account set-up and self service account management.
  • Toll-free voice response account access, with transactional capability.
  • Toll-free administrator assistance and help desk.
  • No-Load/Load-waived access to top performing mutual funds (from more than 50 families).
  • Online retirement planning software, from Newkirk’s MasteryPointTM Financial Technologies.
  • Online investment information, from MorningstarTM.

What does it cost?

  • One-Time Establishment Fee of $100.004
  • Annual Administration Fee of $250.004
  • Annual Asset-Based Fee (varies).  Consult your financial professional for more information.
  • Optional Advisory Fee for your financial professional

1 Amounts withdrawn from retirement plans are generally includable as taxable income in the year received and may be subject to tax penalties if withdrawn before age 59½.

2 A governmental entity may not establish a 401(k) arrangement.

3 Subject to cost of living adjustments.

4 The Solo 401k is not designed for businesses with employees due to the additional testing and administrative requirements, mandated under Federal Law. Annual Administration Fees will be higher for a standard 401k plan, and additional fees may apply.
This information is not intended to be tax advice. Please consult your tax advisor for complete information and its application to your particular situation. Unless specifically stated otherwise, any tax information presented is based upon federal income tax law. State and local income tax laws may differ from federal income tax laws. Some states may not have conformed state income tax laws to the federal changes enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001.

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    ChandCare Health Solutions is a health insurance brokerage founded on the idea of building client relations and providing the best care and affordable coverage.


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