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IRS Announces Annual Self-employed 401(k) Plan Contribution Limitations To Increase by $1,000 for 2014

Self-employed and business owners can defer up to $52,000 and $57,500 if over 50 years old in 2014

Starting on January 1, 2014, the Internal Revenue Services (“IRS”) announced that self-employed and small business owners that have adopted a self-employed 401K plan for the 2014 taxable year will be able to make tax-deferral employee and employer contributions of up to $52,000, which is an increase of $1,000 from 2013.  Self-employed and small business owners, who are over the age of 50, will be able to make tax-deferral employee and employer contributions of up to $57,500, which is an increase of $1,000 from 2013.

Under the 2014 self-employed 401(k) contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $17,500 to an IRA Financial Group self-employed 401(k) Plan. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $52,000.

For plan participants over the age of 50, an self-employed can make a maximum employee deferral contribution in the amount of $23,000. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $57,500.

The annual Self-employed 401k contribution consists of 2 parts, an employee salary deferral contribution and an employer profit sharing contribution. The total allowable contribution limits are combined to get the maximum Self-employed 401K contribution limit.

IRA Financial Group’s self-employed 401K plan is unique and so popular because it is designed explicitly for small, owner only business.  With IRA Financial Group’s self-employed 401K plan, self-employed or small business owners with no employees can benefit by making high annual contributions – up to $52,000 – with an additional $5,500 catch-up contribution for those over age 50, make traditional as well as non-traditional investments, such as real estate, as well as borrow up to $50,000 or 50% of their account value tax-free and penalty free.  IRA Financial Group’s self-directed 401(k) plan is a trustee directed plan meaning the trustee and not the custodian is in charge of making investment decisions on behalf of the plan.  With a self-employed 401(k) plan, in most cases the trustee will be the plan participant providing the plan participant with greater control and investment authority over his or her retirement funds. In addition, with IRA Financial Group’s self-employed 401K Plan, the plan account can be opened at any local bank, including Chase, Wells Fargo, and even Fidelity.

To learn more about the IRA Financial Group please visit our website at www.irafinancialgroup.com or call 800-472-0646.

 

 

 

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Posted in Solo 401(k)