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Self-Employed Individuals Saving More for their Retirement than Employees with Public Companies, According to IRA Financial Group Tax Attorney


Self-employed individuals using Solo 401(k) Plans able to defer more than employees with public companies in 2012.

Miami, FL (PRWEB) December 11, 2012

With the recent news that IBM will begin making contributions to employees' 401(k) accounts in lump-sum annual payments, rather than at the time of each paycheck, likely diminishing 401(k) plan contributions for many employees, many public companies are expected to follow suit, according to a December 6, 2012 Wall Street Journal article titled, "Benefits Leader Reins in 401(k)s." According to Adam Bergman, Esq, a tax attorney with the IRA Financial Group, companies switching to end-of-the-year matches typically save money because they don't provide matching contributions for employees who leave during the year, other than those retiring. Most public companies, such as IBM, match from 3 percent to 6 percent of the amount the employee contributes to the account. However, an employee of a public company is generally able to defer up to $17,000 annually or $22,500 if the employee is over the age of 50. Whereas, with a solo 401k plan, a self-employed individual can defer up to $50,000 over $55,500 if the individual is over the age of 50. “Because most public companies have been reducing their 401(k) plan benefits, the solo 401(k) plan has offered self-employed individuals with higher employee deferral opportunities," stated Maria Ritsi, a senior paralegal with the IRA Financial group.

Across the country, some 60 million workers participate in 401(k)s, which have become a key source of retirement savings. Most companies match from 3 percent to 6 percent of the amount the employee contributes to the account. However, most public companies do not provide employees with any profit sharing contributions. Whereas, a solo 401(k) plan, also known as an individual 401k plan, provided self-employed individuals or small business with no full-time employees with the ability to defer up to 25% (20% in the case of a sole proprietorship of single member LLC), in addition to any employee deferrals up to a maximum annual contribution amount of $50,000 or $55,500 if the individual is over the age of 50.

A solo 401K Plan offers a self employed business owner the ability to use retirement funds to make almost any type of investment, including real estate, tax liens, private businesses, precious metals, and foreign currency on their own without requiring custodian consent tax-free! In addition, an individual 401K Plan will allow a plan participant the ability to make high contribution limits (up to $55,500) as well as borrow up to $50,000 for any purpose. In order to make annual tax deductible or after-tax contributions, the solo 401(k) Plan has to be established prior to December 31. Accordingly, it is very common for small business owners with no employees to start focusing on year-end tax planning towards the end of the year. “We are excited about providing a free platform to help small business owners determine the most tax efficient retirement solution based on each individual's financial, retirement, and investment needs,” stated Mr. Bergman.

IRA Financial Group will take care of setting up the entire individual 401k Plan. The whole process can be handled by phone, email, fax, or mail and typically takes just several days to complete. Our 401k experts and tax and ERISA attorneys are on site greatly reducing the set-up time and cost. Most importantly, each client of the IRA Financial Group is assigned a tax attorney to help with the establishment of the Solo 401k Plan.

To learn more about the IRA Financial Group please visit our website at or call 800-472-0646.

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