Owner-Only / Self-Employed
Owner-only and self-employed retirement plans – Exclusive (k) ®, SEP and SIMPLE IRAs, and defined-benefit plans — give business owners a tax-advantaged way to save for retirement.
What is an Exclusive (k) ® Plan?
The Exclusive (k) ® is a retirement savings plan specifically designed for self-employed business owners with no common-law employees.
Exclusive (k) ® Plan at a Glance
|Who May Establish||A company who employs only the owner(s) and their spouses, if applicable, and have no common-law employees.|
|Establishment||New plans must be established by the last business day of the company’s fiscal year.|
|Employee Eligibility Requirements||Owner(s) and their spouses, if the spouse is actively employed and receives W-2 income.|
|Excludable Employees||Part-time employees (those working less than 1,000 hours per year).|
|Owner/Spouse Employee Contribution Limit||Maximum employee deferral is the lesser of 100 percent of income or $18,000.|
|Catch-up Contributions||Up to $6,000 for participants age 50 or older.|
|Employer Contributions||Discretionary: Maximum of 20 percent of adjusted net business income or 25 percent of W-2 compensation after application of FICA, not to exceed $53,000 when combined with salary deferral feature. $59,000 for those age 50 and beyond.|
|Annual Custodial Fee||$18|
Exclusive (k) ® Benefits
- Generally no third-party administration fees until the assets reach $250,000 or a loan is requested.
- Potential for higher contribution limits than with a SEP IRA or profit sharing plan.
- Employees that work less than 1,000 hours per year can be excluded from the plan.
- Spouses who are employed by the company can elect to participate.
- Loan feature available.