Solo 401K (aka Individual 401K) same as Super-Simplified 401K?

Discussion in 'Tax' started by dchou4u@hotmail.com, Dec 3, 2007.

  1. Guest

    Schwab calls it Individual 401K, and Smith Barney calls it Super-
    Simplified 401K. Some also calls it Single K 401K. I compared the
    details between them and they appear the same. Are they the same thing
    called by different names?

    Schwab has no account maintainance fees nor load to set up one...

    Thanks for any insight....
     
    , Dec 3, 2007
    #1
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  2. Herb Smith Guest

    On Dec 2, 9:49�pm, "" <> wrote:
    > Schwab calls it Individual 401K, and Smith Barney calls it Super-
    > Simplified 401K. Some also calls it Single K 401K. I compared the
    > details between them and they appear the same. Are they the same thing
    > called by different names?
    >
    > Schwab has no account maintainance fees nor load to set up one...
    >
    > Thanks for any insight....


    Looks like you answered your own question.
     
    Herb Smith, Dec 3, 2007
    #2
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  3. John L Guest

    >Schwab calls it Individual 401K, and Smith Barney calls it Super-
    >Simplified 401K. Some also calls it Single K 401K. I compared the
    >details between them and they appear the same. Are they the same
    >thing called by different names?


    Sure. Before you set one up, you might want to look at a SEP IRA.

    Under the current rules, if you're self employed a SEP provides the
    same advantages as other plans, notably the high contribution limits,
    with a lot less paperwork. I used to have paired Keogh accounts, from
    the era when that was the only way for the self employed to put away a
    lot of retirement money, but this year I terminated them and
    transferred the assets into a SEP. No more tedious 5500EZ forms
    (well, other than one final one at the end of this year.)
     
    John L, Dec 3, 2007
    #3
  4. Guest

    John L wrote:
    >> Schwab calls it Individual 401K, and Smith Barney calls it Super-
    >> Simplified 401K. Some also calls it Single K 401K. I compared the
    >> details between them and they appear the same. Are they the same
    >> thing called by different names?

    >
    > Sure. Before you set one up, you might want to look at a SEP IRA.
    >
    > Under the current rules, if you're self employed a SEP provides the
    > same advantages as other plans, notably the high contribution limits,
    > with a lot less paperwork. I used to have paired Keogh accounts, from
    > the era when that was the only way for the self employed to put away a
    > lot of retirement money, but this year I terminated them and
    > transferred the assets into a SEP. No more tedious 5500EZ forms
    > (well, other than one final one at the end of this year.)


    I've had a Keogh for many years, so this discussion prompted me to take
    a look at the Self-Employed 401k (aka Individual 401k aka...). There are
    good articles at Wikipedia and www.sepira.com Significant things to note:

    1) The SEP IRA is a no-brainer when compared to the Keogh. No 5500 to
    file, and essentially the same contribution limits;

    2) The Self-Employed 401k appears to be /slightly/ more complicated than
    the Keogh, with 5500 forms needing to be filed when plan assets exceed
    $250k. However, the big payoff is that you can contribute the same
    amount as a conventional employee 401k (i.e., $15,500 for 2008, plus
    $5,000 "make-up" contribution for age 50+) PLUS the amount you are
    permitted to contribute to a SEP IRA (which is essentially the same as
    the limit for a Keogh). In other words, if you're looking to contribute
    more before-tax dollars to your retirement funds, the Self-Employed 401k
    looks to be a fantastic way to do it, doubling (or better) the
    contribution of a SEP IRA or Keogh!

    Check out http://www.sepira.com/sep_ira/sep-or-401k.htm

    www.Fidelity.com, for example, seems to offer both account types.
     
    , Dec 4, 2007
    #4
  5. kastnna Guest

    On Dec 3, 12:30 pm, (John L) wrote:

    > Sure. Before you set one up, you might want to look at a SEP IRA.
    >
    > Under the current rules, if you're self employed a SEP provides the
    > same advantages as other plans, notably the high contribution limits,
    > with a lot less paperwork.


    A 401k MAY offer a higher contribution limit than a SEP.

    SEPs limit initial contributions to a % of business income (I think
    its 20% after adjustments for 1/2 self employment tax). However, the
    first $15,500 in contributions to an i401k are not limited by a % of
    earnings. For incomes above $225k this doesn't matter (the maximum
    contribution cap becomes the determining factor). For smaller incomes,
    the difference could be huge.

    For example, suppose a 40 yo sole proprietor only earns $20k:

    Under a SEP, he can contribute 20% of $20k = $4000
    Under a 401k, he can contribute $15,500 + 20% of $4,500 = $16,400
     
    kastnna, Dec 4, 2007
    #5
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