Employee Benefits

A 401k allows payroll deferrals up to $19,500 per year with up to $6,500 additional for those contributors at least 50 years old. It also allows a match by the employer of 6% of their salary with certain limitations. A 401(k) plan is beneficial for investors who prefer a safe investment strategy with maximum long-term growth.

A Solo-401k, however, is only available for one-person corporations (C or S). It is also available for spouses who are co-owners of a C or S corp. The contribution levels are the same as the regular 401k and it allows a match by the employer of 25% of their salary. Once another employee is hired (besides a spouse) the Solo 401k may no longer accept contributions however you may transfer the Solo 401k to a Simple IRA for current contributions.

A Simple IRA functions as a Solo 401k for sole proprietorships, partnerships, or corporations (C or S) with multiple employees. One of two matching criteria must be met in order for a corporation to offer a Simple IRA for its employees. You can either offer all participating employees a 3% match or offer all employees 2% of their salary regardless of if they participate in the IRA. 

The Simple IRA allows for a $13,500 salary deduction for employees under the age of 50 and $3,000 for those over the age of 50 on their taxes. 

Managerial costs for the Simple IRA are low compared other plans like the 401k, which is why this is a good option for small to medium size business. 

An SEP IRA is a retirement savings plan established by employers (including the self-employed) for the benefit of their employees & themselves & allows employers to make tax-deductible contributions on behalf of eligible employees.

SEP’s are beneficial because they’re easy to set up, have low administrative costs, & allow an employer to determine how much to contribute each year.

SEP’s also have higher annual contribution limits than standard IRA’s. SEP’s are fundamentally considered a traditional IRA with the ability to receive employer contributions. A major benefit of an SEP is that employer contributions are immediately vested.