Self Employed 401 K Plan is a Small Solution for Retirement Planning for Small Business Owner

A Home Business Article Contributed by Elizabeth Fox-Wise

The Self Employed 401 K Plan is a Great Retirement Solution If You own a Small Business

Tax Relief Act of 2001 offered a retirement solution for small business owners in America. If you own a small business and your only employee is yourself or yourself and your spouse, you should open and contribute to a Self-Employed 401 K plan.

While most retirement plans will provide some type of a tax break and all will help you to save for your future; the Self-Employed 401K plan, which was born with the Tax Relief Act passed by the Bush administration in 2001, offers some additional benefits to the small business owner which really make it the best choice for your retirement planning solution.

Advantages of the Se 401k Plan As a Retirement Planning Solution for Small Business Owners

The 401K plan is a very flexible retirement solution. This plan gives the small business owner completely flexibility of contribution. This small business retirement solution is not set up on installment payments. The small business owner can contribute during whichever part of the year he wishes, can contribute the amount he can each year and can choose not to contribute during the years when there is no money available to contribute.

The 401K plan has higher allowable limits. Your tax deferred contributions can be up to three times as that which is allowed under some other types of retirement plans. This makes this a wonderful small business retirement solution for those who can afford to tuck away a little more. This also gives the small business owner the flexibility to contribute more during the business' prosperous years to offset the more lean years when the small business owner may not be able to contribute anything.

The 401K is an easy retirement solution to set up and maintain through most banks. Unlike larger 401K plans, there are no complicated administrative requirements to have to deal with.

The 401K solution offers a consolidation convenience. The small business owner can consolidate assets from a traditional IRA or other retirement plans into the Self-Employed 401K

A 401K solution also allows access to cash via the 401(k) loan option. The small business owner may take a loan of up to fifty percent of the amount in the 401K account.

Who Can Open a 401k Plan Small Business Retirement Solution?

Any type of small business with no employees, can choose a 401K plan retirement solution. This is often called a Self-Employed 401K, or a Solo 401K. The small business can be just starting up or well established. The small business who chooses this solution can be a sole proprietorship, partnership, or corporation.

Anyone who owns a small business can open a 401K plan. The business can be full time or part time. Owners and spouses of the owners can be employed by the business, and both would still qualify for the 401K plan. The small business can not have any other employees who work more than 1, 000 hours per year.

If you are a small business owner who meets these restrictions, a 401K plan is a perfect retirement solution for you.