An Individual 401(K) may be an attractive way to save for your retirement if you are self-employed (with no full-time employees other than your spouse). This account combines 401(K) compensation deferral with profit sharing plan contributions.
| Your preferred investment option: |
|
Ethical Wrap Program |
Download Important Information |
Wrap Brochure |
Minimum to open |
$10,000* |
Download Plan Application |
Application (New plan? Complete worksheet) |
| Contributions |
Eligibility |
Self-employed individual or business owner with no employees other than a spouse. |
Contribution limit |
Salary deferral: Up to $15,500 in salary deferrals, $20,500 if age 50 or older for year 2008, $16,500 for year 2009 & $22,000 if over 50).
Profit sharing contribution: Up to 25% of compensation* up to a maximum of $46,000 ($49,000 for year 2009). Total employer/employee contributions cannot exceed $46,000 or 100% compensation for year 2008 and $49,000 or 100% of compensation for 2009. Calculate your contribution with our Solo 401(K) calculator |
Funding requirements |
Funded with salary deferrals and profit sharing contributions. |
Deadline |
December 31 or fiscal year-end (whichever comes first) Salary deferrals generally must be made by end of business tax year. Profit sharing contributions due by business tax filing date plus extensions. |
| Annual Tax Reporting |
Annual IRS Form 5500 filing required for plans having assets greater than $100,000. |
| Vesting |
100% Immediate |
| Tax Advantages |
Contributions |
Tax-deductible |
Earnings |
Grow tax-deferred (until withdrawn) |
| Withdrawals |
Taxable |
| Withdrawals |
Withdrawals after age 59½ |
Withdrawals are taxable income in the year received. |
Withdrawals before age 59½ |
Cannot take withdrawals from the plan until a "trigger" event occurs, such as turning age 59½, disability, and/or plan termination (certain exceptions may apply such as death, disability or hardship). |
Required withdrawals at age 70½ |
You must take out what are known as required minimum distributions from your plan when you reach age 70½. |
| Key Strengths |
Key Tradeoffs |
|
- May offer a better combination of benefits than a SEP
- Not required to fund your plan each year
- Relatively simple to administer
- Pretax contributions grow tax deferred
|
- May not meet your future business needs
- Like a regular 401(K) must follow ERISA requirements
|
* This information is not intended as tax advice. For more complete guidance on your particular financial situation, please consult your tax advisor or speak to an Azzad investment advisor at 888-862-9923. Please make sure to read the Azzad mutual funds' prospectus or Ethical Wrap Program's brochure before you invest. The wrap minimum applies after meeting standard minimum with other accounts.
