When are individual 401(k)s a good deal?
- What's an individual 401(k) plan?
- When are individual 401(k)s a good deal?
- Who can contribute to one?
- When can I get access to the money?
- What if I need the money before retirement?
- How should I invest the money?
- How do my withdrawals get taxed in retirement?
- Does an individual 401(k) plan make sense for me?
- Who can help me set up and administer a plan?
These plans are ideal if you intend to sock away large sums. An individual 401(k) allows you to save for retirement both as an employer and an employee, often enabling you to contribute more than would be possible with other retirement plans.
Here's how: As an employee, you can stash away as much as $15,500. As the boss, you can contribute an additional 25% of compensation, up to a maximum of $46,000, including your employee contribution.
These contributions are discretionary, so you can save the maximum in flush years and nothing in tougher times. If you and your spouse are both in the plan and enjoy a banner year, you could save a total of $92,000. And if you are both 50 or older and eligible for catch-up contributions of $5,000 each, the total climbs past $100,000.
