Retirement Strategies LLC, Little Chute Wisconsin

Self-Employed (Solo) 401(k) Plans

A Self-Employed 401(k) Plan is suitable for businesses in which the owner or owners are the only employees (there are no common law employees). The reason a self-employed individual may consider this plan option is that it may offer higher contribution limits than other retirement plans available for small businesses (SEP Plans or SIMPLE IRAs).

A Self-Employed 401(k) Plan is subject to certain IRS limits and regulations, but the administrative costs can be significantly less.

DESIGN FEATURES

Who May Adopt?

Self-Employed Employers (with no common law employees)

Employee Eligibility Requirements

Maximum Requirements:
	Age 21 and 1 year (1,000 hours) of service
* Less restrictive requirements allowed

Employee Deferral Contributions

Limited to:
	$15,500 (2008)
	$16,500 (2009)

Employer Matching Contributions

Employer may establish the plan as a Traditional 401(k) Plan, where Matching Contributions are discretionary, or as a Safe-Harbor Plan, where the Matching or QNEC Contributions are required

Employer Profit Sharing Contributions

Discretionary formulas allowed in any amount elected by the self-employed employer.

Maximum Annual Contributions

Employer Contributions are limited to:
	25% of eligible participant wages

Employee Annual Additions are limited to:
	Lesser of $49,000 or 100% of compensation (2009)

Are Catch-up Contributions Allowed?

Yes, limited to:
	$5,500 (2008)
	$5,500 (2009)

Contribution Deadlines

Employee Deferral Contributions
	Must be deposited by the 15th business day following the month of deferral, or sooner if administratively feasible - the DOL has indicated that contributions made within 7 days will not be considered late

Employer Contributions
	Must be made by the employer’s tax filing deadline, including extensions

Vesting Schedule

Employee Deferral Contributions are always 100% vested

Safe harbor Matching/QNEC Contributions are always 100% vested

Discretionary Employer Match and Profit Sharing Contributions may be subject to a vesting schedule. Examples of possible vesting schedules include a three (3) year cliff (0,0,100) or a six (6) year graded (0,20,40,60,80,100)

Withdrawals and Loans

Withdrawals permitted only upon termination, death, disability or retirement.

Plans may elect to allow hardship or in-service withdrawals

Plans may elect to allow plan loans and must specify the parameters under which a participant can take a loan.

Administration & Reporting Requirements

Top-heavy testing required

Form 5500 filing required

Fidelity Bond required