The following article was posted by Ryan Rippy, the Business Development Manager of The Entrust Group.

Save more with an Individual 401(k) plan and expand your investment options with a self-directed account.  An Entrust self-directed Individual (k) Retirement Account gives you the maximum flexibility and financial ability in investing for your future. The Individual (k) is similar to a 401(k) but for businesses that employ only the owners, their spouses, and partners.

An Individual (k) plan has two components based on your employer and employee roles:

  • (Employee) Salary deferral, based on earned income, up to the allowed limit
  • (Employer) Profit-sharing contribution, maximum 25% of compensation, up to the allowed limit

With Entrust, you can establish the salary deferral component as either a Roth or traditional tax-deferred plan, which reduces your taxes now and offers tax-deferred savings. With the Roth, you make after-tax contributions to the account, and like a Roth IRA, future withdrawals are tax free.

If you currently have an Individual (k) and want to self-direct your funds into nontraditional investments, you can transfer or rollover the funds to Entrust without penalty.

Consider an Individual (k) retirement account if:

  • You are a sole proprietor with no employees other than your spouse or partners.
  • You are looking for the largest potential contribution for a business without employees.
  • You want the flexibility to invest beyond stocks and  mutual funds.
  • You want the capability of borrowing from your plan.
  • You want to purchase leveraged real estate in your plan and avoid UBIT (Unrelated Business Income Tax).

Consult with your CPA or investment adviser to determine whether an Individual(k) works for you.

Entrust Offer These Administrative Options:

With Entrust, you can choose from various service options. Entrust provides the following, depending on the service model.

  • Traditional Service

Required plan documents

Recordkeeping on your self-directed investments

  • Do Your Own (DYO)

Required plan documents

  • Outsourced Service (you must have your own plan documents)

Recordkeeping on your self-directed investments

Individual 401(k) Contribution Limits

The employee salary deferral can be up to 100% of your earned income, up to the maximum annual contribution limit. The employer portion can be up to 25% of compensation. The maximum compensation amount that can be used for calculating your contribution is $250,000 for 2012.

Ryan Rippy, Business Development Manager
The Entrust Group
7700 Irvine Center Drive, Suite 800
Irvine, CA 92618
949.788.2970  |   f 866.815.5168
[email protected]