Get a retirement plan that offers the maximum retirement contribution (limits or levels) for self-employed individuals

The Individual 401(k) puts the power of the 401(k) – with its high contribution limits and flexible investments – into the hands of the business owner. This plan allows owners to make both employer and employee contributions, providing owners the ability to maximize their personal retirement contributions and their business deductions. Since there are no employees, there are no compliance testing requirements. An Individual 401(k) is most suitable for self-employed individuals or a business owner with no additional employees other than a spouse or a child. Consider this type of plan if your business has irregular profit patterns.

• Discretionary funding
• Higher contribution limits
• Greater control over withdrawal timing
• Low administrative expenses. No maintenance or account fees. Regular fees (such as transfer out, partial transfer, wire, overnight and the like) do apply.

Eligible businesses include sole proprietorships, partnerships and incorporated businesses.

An Individual 401(k) must be established by the end of the employer's tax year and funded by the employer's tax return due date, plus extension. Contributions can vary by year.

2010: Up to $16,500 in salary deferrals ($22,000 a year for individuals age 50 and over).

2010: A maximum of 25% of compensation up to $49,000 in employee and employer contributions ($54,500 for individuals age 50 and over).

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