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Mutual Funds and Mutual Fund Investing - Fidelity Investments

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Small Business Overview

Self-employed individuals, owner-only businesses and partnerships can save more for retirement through a 401(k) plan designed especially for you.

With Fidelity, you have no account fees and no minimums to open an account.¹ You'll get exceptional service as well as guidance from our team.

Questions

800-544-5373

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Quick links

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Key things to know

Who is eligible	Self-employed individuals and owner-only businesses. The owner's spouse may participate in the plan.
Tax benefits	Tax-deferred growth, tax-deductible contributions, and pre-tax deferral contributions. Learn more about the tax advantages of self-employed 401(k)s
Who contributes	Funded by compensation deferrals and employer contributions.
Contribution amounts	Individuals may contribute up to $19,500 for 2020 and for 2021. Employers may contribute up to 25% of compensation, up to a maximum of $57,000 in 2020 and $58,000 for 2021. Profit sharing contributions allowed up to 25% of compensation,² up to the annual maximum of $57,000 for 2020 and $58,000 for 2021. Total contributions cannot exceed $57,000 in 2020 and $58,000 for 2021. Additional salary catch up of $6,500 for 2020 (if age 50 or older) and $6,500 for 2021.³
Withdrawals	Cannot take withdrawals from the plan until a "trigger" event occurs, such as turning age 59½, disability or death. 10% early withdrawal penalty applies if you are under age 59½ and taking a distribution. Required minimum distributions start at age 72.⁴
Investment options	A wide range of mutual funds, stocks, bonds, ETFs, and FDIC-insured CDs.
Fees	There is no opening cost, closing cost, or annual fee for Fidelity's self-employed 401(k). $0 commission for online US stock, ETF, and options trades.*^
Administrative responsibilities	Annual IRS Form 5500 filing after plan assets exceed $250,000.
Deadlines	The deadline to open a new plan is generally December 31 (or fiscal year end) if compensation deferrals are intended. The SECURE Act change to tax filing deadline including extensions allows for profit sharing only.
How to make contributions	By phone or by mail.

For all small-business plans, call us at
800-544-5373

Investing involves risk, including risk of loss.

$0.00 commission applies to online U.S. equity trades, exchange-traded funds (ETFs), and options (+ $0.65 per contract fee) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). There is an Options Regulatory Fee (from $0.03 to $0.05 per contract), which applies to both option buy and sell transactions. The fee is subject to change. Other exclusions and conditions may apply. See Fidelity.com/commissions for details. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Clearing & Custody Solutions^® are subject to different commission schedules.

Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read Characteristics and Risks of Standardized Options. Supporting documentation for any claims, if applicable, will be furnished upon request.

No account fees or minimums to open Fidelity retail IRA accounts. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs), and commissions, interest charges, and other expenses for transactions, may still apply. See Fidelity.com/commissions for further details.

Note that the total of salary deferrals and profit sharing contributions cannot exceed $57,000 ($63,500 if age SO or older) for 2020 and $58,000 ($64,500 if age 50 or older) for 2021.

2. Maximum compensation on which contributions can be based is $285,000 for 2020 and $290,000 for 2021. If you are self-employed, compensation means earned income.

3. With catch-up provisions, individuals 50 and older may defer up to $26,000 for 2020 and 2021, subject to the combined deferral and employer contribution limit.

4. The change in the RMD age requirement from 70½ to 72 only applies to individuals who turn 70½ on or after January 1, 2020. Please speak with your tax advisor regarding the impact of this change on future RMDs.

For further information on your specific situation, consult with your tax advisor.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

560603.18.0

Tax Advantages of Self-Employed 401(k)s

A Self-Employed 401(k) may substantially reduce your current income taxes because generally, you can deduct the entire amount of your plan contributions from your taxable income each year.

If your business is unincorporated, you can deduct contributions for yourself from your personal income.
If your business is incorporated, you can generally deduct contributions as a business expense.

Note: Fidelity also offers a Profit Sharing Plan which lets you contribute the same amount as a SEP-IRA. A Profit Sharing Plan may be better suited for your needs if you have multiple employees and want more restrictive eligibility requirements to participate in the plan. Please contact a Fidelity retirement representative at 800-544-5373 and select option 3 for more information.

Self-employed 401(k)

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Tax Advantages of Self-Employed 401(k)s

Mutual Funds and Mutual Fund Investing - Fidelity Investments

Self-employed 401(k)

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Key things to know

Ready to get started?

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Tax Advantages of Self-Employed 401(k)s