For sole proprietors who want to increase their ability to save for retirement (and their spouses who work for the business)
Save more with an Individual 401(k) Plan
This 401(k) plan gives proprietors of one-person businesses (and their spouses who work for the business) the chance to increase their retirement savings.
Call 1-800-831-1344 to get started.
Visit our frequently asked questions page if you want to learn more about individual 401(k) retirement plans.
Individual 401(k) Plan Benefits
Consider the Example Below:
| Without an Individual 401(k) Plan** | With an Individual 401(k) Plan** | |
|---|---|---|
| Net Business Income | $100,000 | $100,000 |
| Less: 1/2 Employment Tax | $7,065 | $7,065 |
| Less: Standard Deduction | $25,900 | $25,900 |
| Less: Plan Contribution | $0 | $39,087 |
| Taxable Income | $67,035 | $27,948 |
| Regular Tax Due | $7,633 | $2,943 |
| Self-Employment Tax Due | $14,130 | $14,130 |
| Total Tax Before Tax Credits | $21,763 | $17,072 |
| Tax Deferred** | $0 | $4,690 |
Market risk affects all investments, including the potential for principal loss. Mutual funds are subject to management fees and expenses.
A retirement account should be considered a long-term investment. Retirement accounts typically incur costs and account fees, which could lower the account’s value. Early withdrawals are subject to taxes and possible penalties. Consult a tax lawyer or accountant for guidance if you want more information about taxes in-depth.
For tax years 2021 and 2022, the maximum compensation that can be used to calculate contributions is $290,000. This amount is increased periodically for inflation.
**Based on 2022 IRS Tax Tables. This graph illustrates a non-corporate, self-employed, married, under-50, family with two dependents, filing jointly The spouse has no source of income, and the individual has a net business income of $100,000. The graph displays the difference in taxes due between making no contributions and making the maximum contribution to an individual 401(k) plan. Each child will receive a child tax credit for 2022, though it will phase out at a higher income level. The potential pass-through deduction has not been accounted for in this calculation. Actual savings will depend on your unique situation and whether the pass-through deduction is available. Please speak with a tax expert about your particular situation.
Each mutual fund account with a balance under $10,000 is subject to an annual $20 account service fee. The following conditions must be met in order for the $20 account service fee to be waived: sign up for electronic delivery of statements and confirmations; keep a combined individual balance of $50,000 or more for all T accounts with Rowe Price (including brokerage, mutual funds, and small business retirement plans) Participants can subscribe to paperless delivery via the T. Rowe Price website once their account is established. A $20 closeout fee will be deducted automatically from the proceeds of the total redemption if the Participant Account is closed during the year. The closeout fee, however, is not charged if the proceeds are being used for a rollover, transfer, or conversion to a T, or if an account service fee has already been assessed to the participant account for that year. Rowe Price retirement plan account or T. Rowe Price IRA.
2Source: Lipper Inc. Based on fiscal year-end data available as of 9/30/2022, 219 of 236 funds (excluding institutional and bank institutional funds as defined by Lipper) more than 6 months old had expense ratios below their Lipper averages.
Small Business Retirement Plans
To open an account, contact a Small Business Retirement Specialist at 1-800-831-1344.
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Looking for more information?
Learn how to open an Individual 401(k) Plan
FAQ
Can I pull a loan from my 401k?
You might be able to take out a loan from the balance of your 401(k) account. Before borrowing money from your 401(k), though, there are a few things you should think about. Any unpaid sums that are not repaid in accordance with the loan’s terms, including interest, become a distribution to you from the plan.
Can you borrow from T Rowe Price?
Within the T. According to the Rowe Price book of business, 26% of participants have an unpaid loan balance, and 86% of plans offer a loan provision.
How long does it take to get a loan from T Rowe Price?
Do 401k loans hurt your credit?
Receiving a loan from your 401(k) has no effect on your credit score and is not taxable unless the loan limits and repayment rules are broken. Short-term loans typically have little impact on your retirement savings growth as long as you pay them back on time.