Self Employed 401k

For self-employed individuals and owner-only businesses. The owner’s spouse may participate in the plan.

Eligibility

Available to self-employed individuals and business owners with no full-time employees other than a spouse. Includes sole proprietors, S corps, C corps, LLCs, partnerships, and nonprofits. Owners must have at least a 5% share in the business.

Contribution Limits

A self-employed 401 (k) plan allows for both employee salary deferrals and employer profit-sharing contributions, making it one of the most flexible and powerful retirement savings tools available to small business owners. Contribution limits are subject to annual IRS guidelines and may change from year to year. For the most current figures, refer to the IRS website on 401(k) and profit-sharing plan limits.

Tax Benefits

Contributions to a Self-Employed 401(k) are generally tax-deductible, reducing your current taxable income. Investment earnings grow tax-deferred, and taxes are only due upon withdrawal during retirement. In some cases, a Roth 401(k) option may be available through the custodian, allowing for after-tax contributions and tax-free withdrawals if certain conditions are met.

Who contributes

A Self-Employed 401(k) allows contributions from both the business owner in their capacity as an employee and the business itself as the employer. As the employee, you can make salary deferral contributions up to the annual IRS limit. In addition, the business can contribute a percentage of your compensation as a profit-sharing contribution. This dual-contribution structure provides an opportunity to maximize annual retirement savings while also reducing taxable income. Spouses who are employed by the business and meet eligibility requirements may also contribute under the same rules.

Withdrawals & Distributions

Withdrawals from the plan cannot be taken until a qualifying event occurs, such as reaching age 59½, becoming disabled, or passing away. Early withdrawals are generally subject to a 10% penalty in addition to regular income taxes. Required Minimum Distributions (RMDs) must begin at age 72, unless the IRS provides updated guidance.

Fees & Expenses

There is no cost to open or close a Self-Employed 401(k) plan. Global Advisers does not charge annual maintenance fees, and our investment management services are provided for a transparent, asset-based advisory fee. Depending on your plan structure and investment selection, additional fund-level expenses or brokerage fees may apply.

Administrative responsibilities

Plan participants are not required to file IRS Form 5500 until their plan assets exceed $250,000. Once that threshold is met, Form 5500-SF must be filed annually. Our team can assist you in meeting this requirement and maintaining compliance.

Deadlines

To make salary deferral contributions for the current tax year, the plan must be established by December 31 (or your business’s fiscal year-end). The SECURE Act allows employer profit-sharing contributions to be made up to the business’s tax filing deadline, including extensions.