401K for sole proprietors

In the U.S., many employers offer 401K plans, but until recently, a sole proprietor could not set up their own tax deferred plan without a fair amount of complication and paperwork. That's changed, but there are still many resources on the web that will tell you that you can't have a 401K without incorporating. You can; see (for example only) The Single-Participant 401(k).

You may be able to contribute as much as $40,000 a year to this kind of plan. There are potential negatives: if you plan on hiring employees later, you will want to think carefully about this because you'll be required to expand this to include the employees. Of course anything like this should be discussed with your tax advisors before jumping in. However, if the plan fits, this is a simple way for the unincorporated sole proprietor to put aside tax deferred money.

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