Owner-Only 401(k) Plan for Small Business Owners
The Owner-Only 401(k) offers the high contribution limits and flexible investment solutions of a traditional 401(k) to owner-only businesses. Owners can contribute as employers and as individuals to potentially maximize personal retirement contributions and business tax deductions. And, since there are no other eligible employees in the plan, there are no compliance testing requirements that could otherwise limit contributions. This keeps your saving potential high and your administrative duties low.
| WHO IT'S FOR |
- Self-employed individuals or business owners with no employees other than a spouse, including
— Sole proprietorships
— Corporations
— Partnerships - New businesses or those with variable profits
- Not for owners who plan to add eligible employees
|
FEATURES
High contribution limits1
- Employer contributions up to 25% of compensation up to $245,000
- Individual salary-deferral contributions up to $16,500
- Individual catch-up contributions up to $5,500 if age 50 or older2
- Combined total contributions up to 100% of compensation not to exceed $49,000 or $54,500 with catch-up contributions
Current tax savings
- Tax-deductible employer contributions
- Tax deduction of individual contributions and tax-deferral on any earnings3
- Salary-deferrals not included in determining employer tax deduction limits
- Offers the potential for maximizing business tax deductions
- Potential to have more tax-free income in retirement through plans that allow for Roth 401(k) deferrals
Flexibility
- Contributions are not mandatory, allowing funding flexibility
- Ability to transfer other retirement plan assets into the plan
- Ability to take loans from the plan (minimum/maximum limitations will apply)
- Wide range of investment options
- Can be used in conjunction with another tax-qualified retirement plan such as a defined benefit plan
- Some plans may permit Roth 401(k) deferral contributions
Simple, low-cost administration
- No complicated discrimination testing
- No detailed administrative requirements
- IRS Form 5500-EZ must be filed annually when plan assets total $250,000 at the end of the plan year
1Contribution limits apply for 2010 and 2009. Amounts for subsequent years may vary.
2Tax legislation provides a catch-up provision for employees age 50 and older in the current year, giving them the ability to potentially make up for missed savings opportunities.
3Taxes due upon withdrawal. You may also be subject to a 10% tax penalty if you take a withdrawal prior to age 59½.
MERRILL LYNCH PACKAGED PLAN SERVICES
The chart below compares the bundled and unbundled retirement plan solutions available to you. Our bundled solutions blend Merrill Lynch Wealth Management’s investment and advisory services with select third-party providers. Our unbundled solution provides an investment-only account that can be matched with virtually any administrative provider.
| Bundled Solution
Pioneer Uni-k PlanSM | Bundled Solution
AscensusSM Individual(k)
Plan (Advisor AllianceTM) | Unbundled Solution
Merrill Lynch RCMA® Account |
Client
profile | For business owners who seek an inexpensive bundled service solution that includes an “automatically” managed investment option (investments are chosen and periodically adjusted) | For business owners who seek a bundled service solution that provides a broad range of investment options | For business owners who want to work with the plan administrator of their choice and seek an investment-only solution offering them access to a broad range of investment options and managed money solutions |
Product
features | Recordkeeping and administration - Roth 401(k) deferral available
- Loans available
- Quarterly participant statements
- Daily valuation of participant accounts
Participant Services - Toll-free number staffed with customer service representatives Monday through Friday 8 a.m. to 7 p.m. ET
- UNI-K contribution worksheet calculator
| Recordkeeping and administration - Roth 401(k) deferral available
- Loans available
- Quarterly participant statements
- Daily valuation of participant accounts
- Service guarantees
Participant Services - Toll-free, interactive voice response (IVR) system with account inquiry and transaction processing, also available in Spanish.
- Dedicated Web sites for plan sponsors and participants, including account inquiry, transaction processing and retirement planning tools and information
| Recordkeeping and administration - Ability to work with plan administrator of plan sponsor's choice
Participant Services - Merrill Lynch web site provides access to account information, research, quotes, market data, news and e-mail
Account features - Investment flexibility
- Daily money account sweeps
- Check-writing privileges
- Funds transfer capability
- Comprehensive monthly statements
- Merrill Lynch 401(k) Profit-Sharing Prototype Plan Document available3
|
Investment
options
available | - Four risk-based model portfolios with automatic rebalancing on a quarterly basis
- Customized model portfolios from 7 different fund families including Pioneer Ibbottson Asset Allocation Series
| - Choose up to 12 investment options from a menu of over 1,000 funds, including BlackRock and participating fund families
| - Choice of investments from over 3,300 investment options, including mutual funds and collective trusts
- Managed money solutions, brokerage services and automated investment services are available
|
| Fees1 | - $100 annual trust fee per participant
- Preparation of draft IRS Form 5500-EZ $250 per year (optional service)2
- One time loan fee of $25
| - $150 annual recordkeeping fee for first participant; $125 for each additional participant
- Preparation of draft IRS Form 5500-EZ $150 per year (optional service)2
- One time loan fee of $125
| - Annual account fees range from $80 - $150 based upon account services3
- Additional charges from the recordkeeper may apply
|
For more complete information on the investment options, including their management fees and other charges and expenses, please consult the prospectuses and other comparable documents. Investors should carefully consider the investment objectives, risks, charges and expenses before investing. This and additional information about the investment options can be found in the prospectuses, which can be obtained by calling your Merrill Lynch Financial Advisor. Please read these documents carefully before investing.
1Additional fees may apply.
2Must be filed when plan assets total $250,000 or more on the last day of the plan year.
3Annual account fee is $50 for plan sponsors who choose to use the Merrill Lynch 401(k) Profit-Sharing Prototype Plan Document.