Solo 401(k) Funding Options
In addition to salary deferrals and profit sharing, Solo 401(k)s can be funded by rolling over or transferring funds from any of the following types of retirement plans:
- Traditional, SEP and SIMPLE IRAs (after a two-year holding period)
- Qualified Plans or Keoghs (Profit Sharing, Money Purchase Pension, Defined Benefit)
- 401(k) plans
- 403(b) plans
- 457 plans
Each Solo 401(k) must be established no later than December 31 or fiscal year-end, whichever comes first, to be eligible for tax deductions for that year.
Solo 401(k) Contribution Limits
As the employee and the employer, the business owner is permitted to make a combination of contributions, including salary deferral and profits from the business. Also, if the business owner is age 50 or older, he or she is able to defer additional salary in the form of a “catch-up” provision.
| Eligible Individuals |
|
2011 |
2012 |
| Employee |
Annual Contribution |
$16,500 |
$17,000 |
| |
50+ Catch-up Provision |
$ 5,500 |
$ 5,500 |
| Employer |
Up to 25% of W2 Compensation, if incorporated |
|
|
| |
Up to 20% of Self Employment Income as Sole Proprietor |
|
|
| Total Plan Contribution Limits |
Lesser of 100% of compensation or the amount indicated here (includes catch-up contribution) |
$54,500 |
$55,500 |