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Originally the 401K retirement plans were introduced in 1978-79 for employees of bigger companies. A large number of self-employed individual was not in favor of 410k plan as these plans incur high costs and complicated administrative procedures. To overcome these difficulties, an Act called Economic Growth and Tax Relief Reconciliation Act 2001 was introduced to make the 401k plan rapid for self employed individuals. This Act did not introduced the new plans but made significant changes to the original law to suit for the requirement of owners of small business or self employed individuals. From year 2002 onwards small family business owners and individuals having no employees (referred to as solo proprietors) were also attracted to participate in the 401K plan.
Changes made in the law facilitate the small business owners and self employed individuals (referred to as sole proprietors) by a provision that they need to carry out costly discrimination testing, which is mandatory for larger plans, while establishing a 410k plan. Only criteria they have to fulfill is that they should have employees with only ‘highly compensated’ category. What is 401K Solo plan or 401K individual plan? The aim of introduction of 401k small business owners plan or 401k individual (solo) plan is to allow these individuals to secure comfortable retired life by contributing and saving through these retirement plans. There are few plan providers who can assist you in establishing your own retirement plan as this is a new concept. Don’t worry about this aspect. You can contact some plan administrators or there are plenty of wed sites which provide you guidance on setting up retirement plan for these categories.
Popularity: 42% [?] Category: Information for small business · Retirement Plans Tags: 401K Plan for small businesses, Retirement Plans, Retirement savings. |
11 responses so far ↓
1 Cool Guy // Nov 9, 2007 at 3:03 pm
Sounds good.
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