Eligibility

An Individual 401(k) plan is available to self-employed individuals and business owners, including sole proprietors, corporations, partnerships, and tax-exempt organizations with no employees other than a spouse. You must have a minimum 5% business share to be eligible.

Tax Benefits

Contributions to a Self-Employed 401(k) plan are tax-deductible. Earnings grow tax-deferred and assets are not taxed until they are withdrawn in retirement.

Who contributes

Funded by compensation deferrals and employer contributions.

Contribution amounts

Contributions amounts are determined by the IRS. See Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits for current information.

Withdrawals

Cannot take withdrawals from the plan until a “trigger” event occurs, such as turning age 59½, disability, or death. 10% early withdrawal penalty applies if you are under age 59½ and taking a distribution. Required minimum distributions start at age 72.

Fees

There is no cost to opening or closing an account. There is no annual maintenance fee. 401(k)s are professionally managed. Global Advisers charges an annual management fee. Other account fees, fund expenses, and brokerage commissions may apply.

Administrative responsibilities

You’ll need to file IRS Form 5500 annually when your plan assets reach or exceed $250,000.

Deadlines

The deadline to open a new plan is generally December 31 (or fiscal year-end) if compensation deferrals are intended. The SECURE Act change to tax filing deadline including extensions allows for profit-sharing only.

Contributions limits for

Maximum combined contribution, including salary deferral, cannot exceed $58,000 for tax year (or $64,500 if age 50 or over); $61,000 for tax year 2022 (or $67,500 if age 50 or older)

Make profit-sharing contributions up to 20% of your self-employment income, up to a maximum of $58,000 for 2021 and $61,000 in .

Make a pre-tax salary deferral up to $19,500 for 2021 and $20,500 for (or $26,000 for 2021 and $27,000 for if age 50 or older).

Investment Options

A wide range of mutual funds, stocks, bonds, ETFs, and more.