Types of 401k Plans?
There are a few types of 401k Plans that can be designed according to your business. If your a solo business owner, partnership regardless of size you do have options.
4 main types of 401k plans.
• Solo 401k Plans
• Traditional 401k Plans
• Roth 401k Plans
• Safe Harbor 401k Plans
What is a 401k Plan?
A 401k retirement savings plan which is provided for by an employer. Retirement plans such as a 401k provides employers and employees the ability to save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.
Solo 401k Plan
A Solo 401(k) is a retirement savings plan designed for self- employed individual business owners. Usually a Solo 401k Plan provides higher contributions limits than a SEP or SIMPLE plan while providing the same tax benefits of a regular 401k without the high fees and standard company employer/employee structure. When it comes to 401k plans, they provide similar features of a larger company’s 401k plan and a profit sharing plan.
401k Plans must be set up by the end of the business’ fiscal year, generally, December 31st.
Traditional 401k Plans
Traditional 401k Plans in simple terms helps employers and employees who are enrolled and contributing retirement dollars to their accounts help defer taxes until withdrawn.
Roth 401k Plans
A Roth 401k is similar to the traditional 401k. The main difference is contributions that are put aside by an employer or employee into their account are after tax dollars. Meaning that taxes will be paid now from each pay check, and once taxes are taken out of each pay check those remaining dollars will then go into the retirement account. After tax dollars.