Self-Employed 401k Plan from Fidelity

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Tax benefits	Tax-deferred growth Tax-deductible contributions Pre-tax employee deferral contributions Learn more about the tax advantages of self-employed 401(k)s
Investment options	A wide range of mutual funds, stocks, bonds, ETFs, and FDIC-insured CDs
Support and guidance	One-on-one guidance—in person, online, or over the phone Research and tools to help you create a long-term plan and choose investments

Tax benefits

Tax-deferred growth

Tax-deductible contributions

Pre-tax employee deferral contributions

Learn more about the tax advantages of self-employed 401(k)s

Investment options

A wide range of mutual funds, stocks, bonds, ETFs, and FDIC-insured CDs

Support and guidance

One-on-one guidance—in person, online, or over the phone

Research and tools to help you create a long-term plan and choose investments

Eligibility	Self-employed individuals and owner-only businesses and partnerships are eligible. Owners’ spouses may also participate.
IRS maximum contribution	Salary deferrals up to $19,000 for 2019 and $19,500 for 2020
Catch-up contribution	Additional salary deferral of $6,000 for 2019 and $6,500 for 2020 (if age 50 or older)²
Profit sharing contribution	Up to 25% of compensation,³ up to the annual maximum of $56,000 for 2019 and $57,000 for 2020
Establishment deadline	The deadline to open a new plan is December 31 (or fiscal year-end).
Administrative responsibilities	Annual IRS Form 5500 filing after plan assets exceed $250,000
Withdrawals	Required minimum distributions starting at age 72⁴ 10% early withdrawal penalty if under age 59½ and no exceptions apply

Eligibility

Self-employed individuals and owner-only businesses and partnerships are eligible.

Owners’ spouses may also participate.

IRS maximum contribution

Salary deferrals up to $19,000 for 2019 and $19,500 for 2020

Catch-up contribution

Additional salary deferral of $6,000 for 2019 and $6,500 for 2020 (if age 50 or older)²

Profit sharing contribution

Up to 25% of compensation,³ up to the annual maximum of $56,000 for 2019 and $57,000 for 2020

Establishment deadline

The deadline to open a new plan is December 31 (or fiscal year-end).

Administrative responsibilities

Annual IRS Form 5500 filing after plan assets exceed $250,000

Withdrawals

Required minimum distributions starting at age 72⁴

10% early withdrawal penalty if under age 59½ and no exceptions apply

Account fees	There is no opening cost, closing cost or annual fee for Fidelity's Traditional, Roth, SEP, SIMPLE, and rollover IRAs.¹
Trading fees	$0 commission for online US stock, ETF, and options trades*^

Account fees

There is no opening cost, closing cost or annual fee for Fidelity's Traditional, Roth, SEP, SIMPLE, and rollover IRAs.¹

Trading fees

$0 commission for online US stock, ETF, and options trades*^

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.

	No Plan	Self-Employed 401(k)
Net Business Profits	$100,000	$100,000
Less Deduction for ½ Self-Employment Tax	-7,065	-7,065
Less Max. Contribution (25% of earned income)³	-0	-18,587
Less Salary Deferral	-0	-18,000
= Taxable Income	= $92,935	= $56,348
Taxes Due⁴	$19,059	$9,858
Taxes Saved	$0	$9,201

How a Self-Employed 401(k) contribution can add up

As you can see from the example below, for 2016 a self-employed business owner who is age 50 with $100,000 in compensation may save up to $23,000 more with a Self-Employed 401(k) than with a SEP-IRA or Profit Sharing Plan.

2016 Example	No Plan	Self-Employed 401(k)
Employer's Tax Deductible Contribution Up to 25%³ of compensation (not to exceed $53,000)	$18,587	$18,587 (25% x $74,348)
Employee's Deferral Option (not to exceed $18,000)	Not applicable	$18,000
Employee's Catch-Up Deferral Option if age 50 or older (not to exceed $6,000)	Not applicable	$6,000
Final Total Contribution	$18,587	$41,587

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) Plans

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Tax Advantages of Self-Employed 401(k)s

How a Self-Employed 401(k) contribution can add up

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Self-employed 401(k) Plans

Reasons to consider Self-employed 401(k) plans

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Tax Advantages of Self-Employed 401(k)s

How a Self-Employed 401(k) contribution can add up