This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Solo 401(k)s Pack a Retirement Punch

Stocks in this article: FITB HIG LM

If you're self-employed, a solo 401(k) plan is one of many options for building retirement savings with pre-tax money.

In addition to a regular IRA, you're likely eligible to open a SEP (Simplified Employee Pension) or SIMPLE (Savings Incentive Match Plan) IRA. For many self-employed individuals, though, the solo 401(k) is a better choice due to generous contribution limits that allow you to sock away a lot of cash for retirement and save on taxes.

If you hold an employer-sponsored 401(k) account, you can make pre-tax, salary-deferral contributions of up to $16,500 in 2009, plus an extra $5,500 if you are 50 or older. With a solo 401(k), however, you can save up to $49,000 this year ($54,500 if you're 50 or older). If your spouse has income from the business, you can double that contribution, to $98,000, or more than $100,000 if you're eligible for catch-up contributions.

Since these contributions come from pre-tax dollars, they can lower your taxable income dramatically, thus reducing your taxes. In fact, your solo 401(k) contributions may even get you down to a lower tax bracket.

In order to open a solo 401(k) account, you must meet one important requirement: You (or you and your spouse) must be the only employee(s) of the business. If you meet that criteria, your business can be any type of legal entity: sole proprietorship, partnership, limited liability company (LLC) or corporation.

Here's why the solo 401(k) may be the best option for you:

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs