Self-Employed Retirement Plans
Overview
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Contribution Due Date: Extended Due Date.
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Plan Establishment: A plan may be set up and funded before the expiration of the extended due date for the taxpayer’s return.
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Defined BenefitContribution $ Limit For 2024: Amount contributed can’t create an annual benefit more than the larger of $275,000 or 100% of participant’s average compensation for highest 3 years.
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Defined Contribution$ Limit For 2024: $69,000
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Defined Contribution % Limit:
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Profit Sharing: 25% (20% of the net) – (contributions discretionary)
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Money Purchase: 15% (13.141%) - (contributions mandatory)
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Minimum Funding Standards for Under-funded Plans– Paid during year in quarterly installments:
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90% of the current plan year’s required contribution, or
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100% of the req’d contribution for the preceding plan year.
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Related IRS Publications and Forms
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Pub 560 – Retirement Plans for Small Business
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Form 5500 – Annual Return/ Employee Benefit Plans
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Form 5500EZ – Annual Return of One Participant Plans
Combo Self-Employment and 401(k) Plans
Self-employed taxpayers can combine 401(k) plans with Keogh and SEP plans to increase the deductible annual contribution. For more information on the combo plans and examples, see the guide “Solo 401(k) Plans.” Also see the guide "Pension Start-Up Credit" for discussion of the pension start-up credit available for small businesses.