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People are rushing to complete their 2013 tax obligation year return and wondering exactly how they can conserve tax obligation for the 2014 tax obligation year. The Solo 401( k) is a strategy that few use. The Solo 401( k) is not a brand-new kind of 401( k) plan and has the exact same regulations and demands as any other 401( k) plan.

Just how much can one add? Business proprietor puts on two hats in a 401( k) plan: worker and also company. Contributions can be made to the plan in both capacities. The owner can elect to delay approximately one hundred percent of settlement (additionally known as earned income for the self-employed) as much as $17,500 for both 2013 as well as 2014 tax years. If he is age 50 or over, there can be an added $5,500 (called the "catch-up" payment) to make the total $23,000 per year.

The second component is the employer contribution of up to either 25 percent of the settlement specified by the plan, typically salaries, or a different estimation for the freelance individual. If the person is age 50 or over, there can be an added $5,500 "catch-up" payment, making the overall maximum contribution to the Solo 401( k) intend $56,500 for 2013 as well as $57,500 for 2014.

Example of a Schedule C, unincorporated small business, where the proprietor learn more about setting up a Roth Solo 401k goes to the very least age 50 as well as the net earnings in 2014 is $200,000:

If one takes 20 percent of $190,067.85, the optimum employer profit sharing payment is $38,013.57. In comparison, the contribution restriction for a BASIC Individual Retirement Account plan would certainly be $20,035.96 or $38,013.57 for a SEP Individual Retirement Account plan. One can add significantly even more to a Solo 401(k) instead of these various other two employer Individual Retirement Account plans, and absolutely a lot even more than the $6,500 restriction for a standard individual IRA plan.

Target dates: One need to establish your Solo 401(k) plan by December 31, 2014, if you intend to make a contribution for tax year 2014 and minimize taxable income. The payments should be funded by your tax-filing target date. If one declare the 6-month expansion before the April 15, 2015 target date to file one's 2014 income tax return, one would have up until October, 15, 2015, to make the cash payment.


The Solo 401( k) is not a new type of 401( k) strategy and has the exact same rules as well as needs as any other 401( k) strategy. The organisation owner uses two hats in a 401( k) strategy: staff member and company. If the individual is age 50 or over, there can be an extra $5,500 "catch-up" contribution, making the total optimum payment to the Solo 401( k) plan $56,500 for 2013 and also $57,500 for 2014.

One can add substantially even more to a Solo 401(k) rather of these other two company Individual Retirement Account plans, as well as definitely a lot more than the $6,500 limitation for a standard individual IRA plan.

Due dates: One have to establish your Solo 401(k) plan by December 31, 2014, if you desire to make a payment for tax obligation year 2014 and minimize taxed revenue.