Customization Option: Vesting of Employer Contributions

The 401k plan's popularity lies in that it enables people to shelter a significant portion of their income from current income taxes. In some cases, a 401k plan enables a person to shelter more than twice as much as do other qualified retirement plans (money purchase pension plans, simplified employee pension (SEP) plans and savings incentive match plans for employees (SIMPLEs), more specifically). Until recently, however, a 401k plan needed multiple plan participants. It was not an option for one-person companies and the like - again, that is, until 2002. The one-person 401k plan is now a reality.

As the name suggests, 401k Census for One is a version of our most popular product, 401k Census, written to meet the regulatory, administrative and participation needs specific to one-person 401k plans.

  • 401k Census for One is for owner-only businesses (including spouse) and businesses with employees that can be legally excluded from participating in the company plan.
  • 401k Census for One costs $695 per year + a one-time, first-year-only set-up fee of $995.
  • 401k Census for One allows for the same immensely broad spectrum of no-load investments as well as self-directed brokerage accounts as is available with our multipartite 401k Census plans (investment flexibility not common in most one-person 401k plans).
  • 401k Census for One allows for 401k loans.
  • 401k Census for One allows for the spouse to participate, too.
  • 401k Census for One can affordably be converted into a multi-participant 401k plan, should the need arise (if your company expands and takes on additional employees, for instance).
  • 401k Census for One can process rollovers from SEP, SARSEP, SIMPLE IRA, traditional IRA, rollover IRA, Keogh, 401k, 403b and 457 plans.

Below are some key draws of the one-person 401k plan in general:

  • The employer/business owner may contribute up to $41,000 per year, depending on income.
  • 401k contributions come from "pre-tax" dollars. Contributions are not subject to income tax until withdrawn from the 401k account.
  • Earnings on 401k investments are also tax-deferred until withdrawn.
  • Salary deferrals can equal up to 100% of compensation, up to an annually-adjusted maximum of $15,000 (as of 2008).
  • Profit-sharing contributions up to 25% of salary can also be made.
  • Participants age 50 and older can contribute an additional "catch-up" contribution of up to $5,000 annually (as of 2008).
  • Tax-deferred retirement savings housed within a 401k or other authorized plan are generally excluded from bankruptcy proceedings. Outstanding 401k loans, however, are generally NOT erased by bankruptcy.

You can read further about one-person plans on our 401k Basics page.

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