Considering a 401(k) What is Next?
Now that we’ve shared the merits of an Individual 401(k), how do you proceed? These popular and unique plans give the self-employed and small business owners plenty of options for retirement planning and investing.
To carry on with next steps, make sure you’re eligible for an Individual 401(k). You’ll be surprised to discover how many people are eligible for one- including, quite possibly, yourself!
Am I Eligible for a Solo 401(k)?
If you own a business with employees that are excluded from 401(k) coverage (such as part-time staff), or are an independent contractor or sole proprietor, an Individual 401(k) plan is perfect for you. To qualify, you must demonstrate self-employment and have no full-time employees.
Am I Self-Employed?
It might seem like a straightforward question, but you may be considered self-employed even if you do consulting just part-time. Self-employment can mean the ownership and operation of an LLC, C or S corporation, sole proprietorship or limited partnership in which the organization intends to generate revenue for profit. Luckily, there are no thresholds for how much profit you must generate or how much you much contribute to the Individual 401(k). Therefore, part-time self-employment may be considered adequate on top of full-time employment, meaning you may be able to hold an Individual 401(k) as well as your full-time employer’s 401(k).
What Kind of Employees Can I Have to be Eligible for a Solo 401(k)?
Any full-time employee, with the exception of your spouse, would exclude you from eligibility for an Individual 401(k).
If you are interested in increasing your retirement savings, contact us today at 440-484-5566.