Individual 401(K) Retirement Plan
The individual 401(k) plan is a type of 401(k) plan, as the name denotes, designed specifically for owner-only coverage. While you’ll find these plans marketed under a number of different names (Individual(k), Uni-K, Solo-K, Owner-Only 401(k)), the common characteristic is that these names are used to denote a 401(k) product that is designed specifically for the “owner-only” market.
| Feature | Summary | Details |
|---|---|---|
| Employer Eligibility | Restricted | Only appropriate for businesses that qualify for owner-only coverage |
| Minimum Age Restriction | Age 18 | States may require employees to be 18 years of age to begin contributing to a 401k |
| Maximum Service Restriction | 1 Year of Service | Potentially viable for business with common-law employees if employees work less than 1000 hours/yr. |
| Annual Notifications/Reporting | Form 5500-EZ | Must file Form 5500-EZ with IRS/DOL once plan assets reach $250,000 (and last plan year regardless of assets) |
| Funding Options | Employer and Employee | Maximum contributions typically achieved through combination of profit sharing and employee deferral |
| Maximum Contribution (2024) |
$69,000 Extra $7,500 (age 50+) |
Ability to achieve maximum funding is dependent on business owner’s level of compensation |
| Special Features |
Plan Loans Higher Funding |
May afford advantages not available through SEP or SIMPLE IRA (e.g., plan loans, higher funding) |
| Withdrawal Restrictions | Yes | Typically not distributable prior to death, disability or separation from service or plan termination |