You can open an Individual 401(k) at most online brokerage firms, though you’ll need an Employer Identification Number which you can get in real time from the IRS website. The broker you chose will provide an account application and adoption agreement along with supporting documentation for your records. Once you establish the account(s), you can start to make contributions so long as your plan is established by December 31st of the tax year you wish to make your first contribution. There is a wide range of investments offered by your broker for Individual 401(k)s, that including mutual funds, index funds, exchange-traded funds, individual stocks, CDs and bonds. You will likely be limited to covered calls for option strategies given these are Qualified Retirement Plans (QRP) but the flexibility is far greater than a traditional 401(k) offered through most large companies.
- Generally speaking, you have until your tax-filing deadline for the tax year to make employer profit-sharing contributions.
- The IRS requires an annual report on Form 5500-SF if your 401(k) plan has $250,000 or more in assets at the end of a given year, so keep that in mind once the plan takes off. This is a fairly easy form to file but is an added step compared to a SEP IRA or IRA account…but you’re getting other advantages in using the Individual 401(k).