Solo Ks, also known as individual 401Ks, are a great retirement vehicle for owner operated small businesses. A variety of benefits highlight the importance of solo Ks for the small business owner. Reduced costs, higher contribution limits and consolidating accounts are all benefits to solo Ks.

Benefits of Solo Ks

Solo Ks cost less than traditional 401Ks and allow for greater contributions than traditional IRAs. Traditional 401Ks have regulations that drive the costs of having a plan higher. Higher fees involved with larger 401Ks prohibited many business owners from taking advantage of the plan. Administration for solo Ks is for less than traditional, larger 401Ks which keeps the cost low.

Solo Ks also have larger contribution limits compared to most retirement plans. Contributions as high as $41,000 annually in some instances are allowed. Compared to the $3,000 annual limit of traditional and Roth IRAs, solo Ks allow for a greater potential investment. The amount you can contribute to the plan varies for each situation. Visiting with a financial advisor will help determine what your specific contribution limit is. Contributions into the plan are tax deductible.

Solo Ks are relatively easy to start and are highly flexible. Solo Ks offer an opportunity to consolidate other retirement accounts, including previous 401Ks and IRAs, into one account. Streamlining your accounts will reduce the time and paperwork involved with managing your retirement plan. Less time spent tracking your accounts can equal more time with family and friends or growing your business.