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1
Ceffer
@
2018 Dec 5, 5:06pm
Ceffer
@
2018 Dec 5, 5:06pm
https://investor.vanguard.com/small-business-retirement-plans/individual-solo-401k
Not many cons, if you don't have employees outside of spousal unit.
Not many cons, if you don't have employees outside of spousal unit.
2
CL
@
2018 Dec 5, 5:18pm
CL
@
2018 Dec 5, 5:18pm
Yep. That's what I was thinking. I've read that Etrade's was good too. I am just somewhat unclear on fees.
I think I'd do just regular contributions to like an S&P ETF or something.
Thanks, BTW.
I think I'd do just regular contributions to like an S&P ETF or something.
Thanks, BTW.
3
Rin
@
2018 Dec 5, 5:23pm
Rin
@
2018 Dec 5, 5:23pm
CL says
IMHO, Dividend Aristocrat ETFs only, as the index trackers alone, may go sideways or down (& then up) for some time.
S&P ETF or something.
IMHO, Dividend Aristocrat ETFs only, as the index trackers alone, may go sideways or down (& then up) for some time.
6
Ceffer
@
2018 Dec 5, 7:49pm
Ceffer
@
2018 Dec 5, 7:49pm
It looks like contribution limits for employers are better with solo 401k, and 'employee' contributions (wife?) can be higher and done as a Roth.
The killer for many plans are the employees, who legally require contributions according to pretty generous vesting schedules, and this also increases costs of plan administration. It also places a 'contribution' tax on the payroll that can negate the benefits of the plan to the employer. That, and employees seldom recognize or appreciate the contribution, but become a leg of harassment over loans etc. from the plans. again, administration costs and hassle. I have known small business professionals who have foregone the more complex plans for their own retirement for these reasons, and just have personal IRAs. If you have very high turnover of employees, it might still be OK according to cost benefit analysis, since they may not qualify or vest, and a portion of their contribution would revert to the general plan fund i.e. owner and long term employees. Still, plans have administrative costs that may not be practical for small businesses.
For solo business with wife, there is no such disadvantage if you want to make large contributions.
The killer for many plans are the employees, who legally require contributions according to pretty generous vesting schedules, and this also increases costs of plan administration. It also places a 'contribution' tax on the payroll that can negate the benefits of the plan to the employer. That, and employees seldom recognize or appreciate the contribution, but become a leg of harassment over loans etc. from the plans. again, administration costs and hassle. I have known small business professionals who have foregone the more complex plans for their own retirement for these reasons, and just have personal IRAs. If you have very high turnover of employees, it might still be OK according to cost benefit analysis, since they may not qualify or vest, and a portion of their contribution would revert to the general plan fund i.e. owner and long term employees. Still, plans have administrative costs that may not be practical for small businesses.
For solo business with wife, there is no such disadvantage if you want to make large contributions.
7
Evan F.
@
2018 Dec 5, 11:26pm
I have a SEP. Worthwhile for me because I'm Incorporated as a C Corp and have been heavily front loading my retirement as the contribution limit is quite high.
8
Blue
@
2018 Dec 6, 1:24am
Patrick says
No.
SEP - contribute up to 25% of the salary. (2018 max $55,000)
solo or i401k - has two parts to contribute: (2018 max $55,000 + 6k if you are 50+)
1. Employee Contributions: As an employee, you can defer up to 100% of your compensation, or “earned income” up to $18,000 (plus $6k if you're 50+ = $24k max)
2. Employer Contributions: This is a bit complicated to calculate, its anywhere from 20% to 25% depends on your situation (irs.gov site has a form to do math)
btw, if the account total value goes more than $250k, irs expects to fill certain form(s) periodically and submit to clients I guess.
In either case account has to be opened on or before Dec 31 tax year to contribute and the not everyone qualify for the above two depends on the income limits.
ref:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps-contributions
https://www.irs.gov/retirement-plans/one-participant-401k-plans
Is a solo 401k the same as an SEP IRA?
No.
SEP - contribute up to 25% of the salary. (2018 max $55,000)
solo or i401k - has two parts to contribute: (2018 max $55,000 + 6k if you are 50+)
1. Employee Contributions: As an employee, you can defer up to 100% of your compensation, or “earned income” up to $18,000 (plus $6k if you're 50+ = $24k max)
2. Employer Contributions: This is a bit complicated to calculate, its anywhere from 20% to 25% depends on your situation (irs.gov site has a form to do math)
btw, if the account total value goes more than $250k, irs expects to fill certain form(s) periodically and submit to clients I guess.
In either case account has to be opened on or before Dec 31 tax year to contribute and the not everyone qualify for the above two depends on the income limits.
ref:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps-contributions
https://www.irs.gov/retirement-plans/one-participant-401k-plans
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(Also, long time- no see!) :)