The Solo 401K is a Retirement Plan, which can be used for a business with no employees other than business owner and spouse. You must have no expectations of having others employees, to consider this 401K Plan.

In a Solo 401K, you can currently contribute up to $42,000 a year (2005) (up to $14,000 for salary deferral and $28,000 in this case for profit sharing). There is also a $4000 a year catch-up if you are at least age 50. However the first $14,000 of your income can be contributed $1 for $1. So if your salary is $14,000 a year, conceivable you could put in $14,000 into your Solo 401K Plan. After the first $14,000 of income, you can add $14,000 plus $.25 on every $1 of all contributions made, unless this amount is more than what is contributed. Once your eligibility for $42,000 is met in a Solo 401K, you are done unless you are able eligible for the catch-up provision.

The Solo 401K Plan has many advantages. Your 401K assets will grow on a tax-deferred basis. There is also no need for 401K testing for discrimination, because it is impossible to discriminate against yourself. You can possibly take a loan of $50,000 if you have $100,000 in most plans, and can usually deduct your contributions from your taxes.

While a Solo 401K may sound like the plan for you, it is important to weigh all of the benefits of this plan against others. The Solo 401K can be a good product for business owners who have no other employees other than their spouse. There are unique rules in regards to how much and how to calculate, eligible contribution, however we have supplied you with the formula.

Please do not construe this article concerning the Solo 401K as tax or investment advice, please consult a financial advisor or tax accountant for more information...

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