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Beginning
in 2002, new tax laws have cleared the way for a 401(k) plan designed
specifically for owner-only businesses. The Owner(k) from PenSys works
like a regular 401(k) plan, except it is limited to one-person firms with
no employees other than a spouse.
Because these businesses don't have any employees, owners don't have to
worry about the nondiscrimination and top-heavy rules that plague regular
401(k) plan sponsors.
Each year, the business owner can make an "employee" contribution
to the Owner(k). This is the same amount employees can put into regular
401(k) accounts.
The limit in 2011 is 100 percent of pay, up to a maximum of $16,500 ($22,000
for people over 50). In addition, the business owner can make a profit-sharing,
or "employer" contribution of up to 25% of earned income
if the business is unincorporated (or 25% of W-2 income if the
business is incorporated).
The sum of these two contributions may not exceed $49,000 ($54,500 for
those over 50).
Whether your business is incorporated or unincorporated, the Owner(k)
may provide you with much larger tax-deductible contributions than other
retirement plan options.
Advantages
- Tax
Advantage. Owner(k) contributions are tax-deductible by
your business, and earnings grow on a tax-deferred basis until withdrawn.
- Flexible.
You decide each year whether to contribute and how much to contribute.
- Simple
to Maintain. Owner(k) is easy and inexpensive to maintain.
Unlike traditional 401(k) plans, there are no complicated discrimination
tests.
- Loans. You can take loans from your Owner(k) account -- tax-free and penalty-free
-- under the same guidelines available to large 401(k) plans.
- Account
consolidation. Owner(k) can be used to consolidate retirement
assets held in different plans to create one convenient retirement
account.
View the Owner(k) Plan Highlight Sheet
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PenSys Owner(k) Plan