Solo 401K (aka Individual 401K) same as Super-Simplified 401K?

Schwab calls it Individual 401K, and Smith Barney calls it Super- Simplified 401K. Some also calls it Single K 401K. I compared the details between them and they appear the same. Are they the same thing called by different names?

Schwab has no account maintainance fees nor load to set up one...

Thanks for any insight....

Reply to
dchou4u
Loading thread data ...

Looks like you answered your own question.

Reply to
Herb Smith

Sure. Before you set one up, you might want to look at a SEP IRA.

Under the current rules, if you're self employed a SEP provides the same advantages as other plans, notably the high contribution limits, with a lot less paperwork. I used to have paired Keogh accounts, from the era when that was the only way for the self employed to put away a lot of retirement money, but this year I terminated them and transferred the assets into a SEP. No more tedious 5500EZ forms (well, other than one final one at the end of this year.)

Reply to
John L

I've had a Keogh for many years, so this discussion prompted me to take a look at the Self-Employed 401k (aka Individual 401k aka...). There are good articles at Wikipedia and

formatting link
Significant things to note:

1) The SEP IRA is a no-brainer when compared to the Keogh. No 5500 to file, and essentially the same contribution limits; 2) The Self-Employed 401k appears to be /slightly/ more complicated than the Keogh, with 5500 forms needing to be filed when plan assets exceed $250k. However, the big payoff is that you can contribute the same amount as a conventional employee 401k (i.e., $15,500 for 2008, plus $5,000 "make-up" contribution for age 50+) PLUS the amount you are permitted to contribute to a SEP IRA (which is essentially the same as the limit for a Keogh). In other words, if you're looking to contribute more before-tax dollars to your retirement funds, the Self-Employed 401k looks to be a fantastic way to do it, doubling (or better) the contribution of a SEP IRA or Keogh!

Check out

formatting link
formatting link
for example, seems to offer both account types.

Reply to
NoSuchPerson

A 401k MAY offer a higher contribution limit than a SEP.

SEPs limit initial contributions to a % of business income (I think its 20% after adjustments for 1/2 self employment tax). However, the first $15,500 in contributions to an i401k are not limited by a % of earnings. For incomes above $225k this doesn't matter (the maximum contribution cap becomes the determining factor). For smaller incomes, the difference could be huge.

For example, suppose a 40 yo sole proprietor only earns $20k:

Under a SEP, he can contribute 20% of $20k = $4000 Under a 401k, he can contribute $15,500 + 20% of $4,500 = $16,400

Reply to
kastnna

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.