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Individual 401(k)

General DescriptionAs a small business owner with no employees, you may be able to contribute more than with other retirement plans.

An Individual 401(k) may work well if you have income of less than $200,000 and want to maximize your retirement savings. With an Individual 401(k) you have the flexibility to change how much your business contributes from year to year.
Eligibility to ContributeYou can contribute at any age if you are self-employed or a business partner.
Maximum Annual Contribution May use a combination of salary deferral and profit sharing contributions.
  • Profit Sharing: Up to 25% of compensation or $51,000 (2013) or $52,000 (2014).
  • Salary deferral: Up to 100% of compensation or $17,500 (2013/2014) [$23,000 (2013/2014) if over age 50].
  • Combination may not exceed $51,000 (2013) or $52,000 (2014) [$56,500 (2013) or $57,500 (2014) age 50 and older].
Tax-Deductible ContributionsAs a small business owner, you can deduct your contributions for yourself, and your business partner from your company’s federal taxable income.

Your plan may now allow you to allocate part or all of your deferral to a Roth 401(k). Roth 401(k) salary deferrals are not tax deductible but contributions and earnings have the potential to grow tax deferred and may be eligible for income tax free withdrawals if held for five years and attaining age 59 ½.
Taxation of Earnings and WithdrawalsTax-deductible contributions and earnings are taxed as ordinary income when withdrawn.
Types of InvestmentsMutual Funds available through Wells Fargo Advisors, LLC.
Minimum Initial InvestmentVaries by investment option
Withdrawal Penalties 10% IRS early withdrawal penalty if withdrawn before age 59 ½ unless exception applies.

Exceptions include:
  • Normal retirement age
  • Death
  • Disability
  • Substantially equal payments made over life expectancy
  • Termination of service after five years and reaching age 55
  • Rollover to an IRA
  • Qualified military reservist
Required WithdrawalsMust begin at age 70 ½.
Deadline to Set Up and FundPlan must be established by the last day of the business’ fiscal year.
  • Salary deferral portion of the contribution must be deducted from a paycheck prior to year end.
  • Business owner (employer) contribution may be made up through the business’ tax filing due date plus extensions.
Commissions and FeesVaries by account and investments
Learn more about saving for retirement; contact a Wells Fargo financial professional today!
Investment and Insurance Products: Are Not insured by the FDIC or any other federal government agency - Are Not deposits of or guaranteed by the Bank or any Bank Affiliate - May Lose Value
Brokerage products and services including WellsTrade are offered through Wells Fargo Advisors. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, (Members SIPC), non-bank affiliates of Wells Fargo & Company.
Financial Advisors are registered representatives of Wells Fargo Advisors LLC, member SIPC, a non-bank affiliate of Wells Fargo & Company.
Information published by Wells Fargo Bank, N.A., Wells Fargo Advisors, or one of its affiliates as part of this website is published in the United States and is intended only for persons in the United States.