Individual 401(k)

Individual 401(k)

The Individual 401(k) is an employer-sponsored retirement plan that provides significant advantages to small businesses whose only employee(s) is the owner or the owner and their spouse.

Candidates include: C corporations, S corporations, partnerships and sole proprietorships. In many situations, the plan may allow larger tax-deductible contributions than other retirement plans such as SIMPLEs, SEPs or profit sharing plans.

Check with your Hilliard Lyons Wealth Advisor to see if you could benefit from the Individual 401(k). It’s quick and easy and might be the best thing you could do for your retirement.

Features of an Individual 401(k)

Who May Establish:

Available for any business whose only employee(s) is the owner or the owner and their spouse. If you anticipate hiring employees in the near future, this plan is not for you.

Plan Establishment Deadline:

Business tax year end.

Contribution Ceilings:

Contributions are discretionary each year. In other words, you have the flexibility to contribute according to your ability. The employer contribution limit is 25% of compensation. Salary deferrals are allowed up to $18,500 (indexed for inflation). Together, these two contributions cannot exceed the lesser of $55,000 (indexed for inflation) or 100% of compensation.

Contact your Wealth Advisor for more details.

Roth Individual 401(k) Option:

With the Roth provision, you have the choice of making all or a portion of your salary deferrals on an after tax basis.

Catch-Up Contributions:

Up to an additional $6,000 (indexed for inflation) of salary deferrals for individuals age 50 and older.


100% immediate.

Tax Benefits:

Contributions are tax deductible, and earnings accumulate on a tax-deferred basis.


Money can be rolled into your Individual 401(k) from most other tax-deferred retirement plans, including a traditional IRA, SEP, SIMPLE, 401(k), Keogh, money purchase or profit sharing plan.


Available up to 50% of account balance or $50,000, whichever is less. Repayment subject to IRS guidelines.


Available after age 59 1⁄2, or upon death, disability or plan termination.

Government Reporting:

The owner must file Form 5500EZ once plan assets exceed $250,000 or at okab termination.


The business owner serves as Trustee of the plan.

Allow Hilliard Lyons’ industry experience and consultative approach to help you with your retirement goals. Talk with your Hilliard Lyons Wealth Advisor about whether the Individual 401(k) is the right fit for your business.

Plan for your future with a qualified retirement plan from Hilliard Lyons. If the Individual 401(k) is not suitable for your situation, another plan, such as a SIMPLE or SEP, may be the perfect fit.

Securities offered through J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA & SIPC.

Hilliard Lyons does not offer tax or legal advice. Please consult your tax advisor or attorney before making any decision that may affect your tax or legal situation. © 2018 J.J.B. Hilliard, W.L. Lyons, LLC.

J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA, & SIPC

Share |

Have A Question About This Topic?

Thank you! Oops!

Related Contents

Retiring the 4% Rule

Retiring the 4% Rule

A portfolio created with your long-term objectives in mind is crucial as you pursue your dream retirement.

Is a Variable Annuity Right for Me?

Is a Variable Annuity Right for Me?

Pundits go on and on about how “terrible” or “wonderful” annuities are, but they never talk about whether annuities are right

Retirement Plan Distributions

Retirement Plan Distributions

There are a number of ways to withdraw money from a qualified retirement plan.