Self directed Individal K

Self-Directed Individual 401(k)

What is an Individual 401(k)?

An Individual 401(k), also known as a Solo 401(k), is a retirement account that gives you maximum flexibility and freedom to invest for your future. The Individual(k) is similar to a traditional 401(k), but is designed specifically for businesses that employ only the owner, their spouse, and partners.

An Individual(k) plan has two components based on your role as both employer and employee:

  • (Employee) Salary deferral, based on earned income, up to the allowed limit
  • (Employer) Profit-sharing contribution, maximum 25% of compensation, up to the allowed limit

With Entrust, you can establish the salary deferral component as either a Roth or traditional tax-deferred plan, which reduces your taxes now and offers tax-deferred savings. With the Roth, you make after-tax contributions to the account, and future withdrawals are tax free.

Individual 401(k) Eligibility Requirements

You can open and make contributions to an Individual(k) if both of the following requirements are met:                             

  1. You are a sole proprietor, or you own a business with no employees other than a spouse or partners.
  2. Taxable compensation has been received during the year.                                                              

Self-Directed Individual(k) Basics

A self-directed account is different because it allows you to have more investment freedom.  Self-directed retirement plans offer the unique opportunity to hold alternative assets, such as real estate, precious metals, and more.  

If you currently have an Individual (k) and want to self-direct your funds into nontraditional investments, you can transfer or rollover the funds to Entrust (without penalty) and gain access to a wide range of alternative investments, from real estate and gold to private stock and small business. Contact us to get started today.

Considerations

How to determine if an Entrust self-directed Individual(k) is the right retirement plan for you:

  • Are you a sole proprietor with no employees other than your spouse or partners?
  • Are you looking for the largest potential contribution for a business without employees?
  • Do you want the flexibility to invest beyond stocks and  mutual funds?
  • Do you want the capability of borrowing from your plan?
  • Do you want to purchase leveraged real estate in your plan and avoid UBIT (Unrelated Business Income Tax)?

If you answered 'yes' to all or most of these questions, an Individual(k) may be a good choice for you. 


In addition to the allowances above, Entrust offers you the option to choose from various service options. Explore these options to see how you can best direct your future with ease:

    • Traditional Service
      • Required plan documents service
      • Recordkeeping service on your self-directed investments
    • Do Your Own (DYO) (you must do your own recordkeeping and reporting)
      • Required plan documents service
    • Outsourced Service (you must have your own plan documents)
      • Recordkeeping service on your self-directed investments

 

Individual(k) Contribution Limits

There are two contribution limits associated with Individual(k)s because there are two contribution components; employee and employer:

 

  • Employer contribution: $52,000 (2014) 
  • Employee contribution: $17,500 (2014)

 

Individual(k) accounts also allow for catch-up contributions.  If you are over the age of 50, you may contribute an additional $5,500 for the year 2013.

Visit our Learning Center Resources for up-to-date information on contribution and income limits.