If you're thinking about buying a franchise with your retirement dollars, you may be wondering, "How is CatchFire Funding's self-directed 401k plan different than the plan that I am already participating in?"
Our self-directed 401k program is almost identical to the plan you're already enrolled in. In fact, it follows the same laws as the retirement plans that are used by large corporations. Just like an employer-sponsored plan, you have the option to invest in mutual funds, purchase company stock, or if you want, purchase stock from other companies on the open stock market.
If you're hooked on having a 401k retirement plan, you don't have to give that up when you use your retirement savings to fund your franchise. Our program allows you, and your eligible employees to make the SAME types of investments with your retirement dollars.
How much can I contribute to my 401k annually?
Now that you know that our 401k plan functions the same as most plans that you're already familiar with, the next question is, "How much can I contribute to my 401k each year?"
As they pertain to contributions, there are two annual limits that apply:
- The limit on employee elective deferrals, and
- The overall limit on contributions to a participant's plan account, including all employer contributions, employee elective deferrals, and forfeiture allocations.
2015 401k and Profit-Sharing Limits
The maximum amount that you can contribute changes every year. On Oct. 23, 2014, the IRS announced cost-of-living adjustments affecting the contribution limits for retirement plans for 2015.
Many pension plan limitations changed in 2015 due to the increase in the cost-of-living index. This is how much you can contribute to your 401k in 2015:
- For the current tax year (2015), you can personally make a maximum deferral contribution of $18,000.
- If you choose to have your company make additional employer contributions, then the IRS allows you to save a maximum of $53,000 per tax year.
If the 401k plan permits, at the end of the calendar year, plan participants ages 50 and up are allowed to make "catch-up" contributions of $6,000. In this scenario, you do not have to be "behind" in your plan contributions to qualify for additional elective deferrals.
Overall Limit on Contributions
You are limited by the total annual contributions that you make to all of your accounts in plans that are maintained by one employer. The annual limit applies to the total of:
- The elective deferrals
- Employer-matched contributions
- Employer nonelective contributions
- Allocations of forfeitures
The annual contributions paid to a participant's account cannot exceed the lesser of:
- 100% of the participant's earnings, or
- $53,000 ($59,000 including catch-up contributions) for 2015
Note: There are smaller, separate limits for SIMPLE 401k plans.
Now that the Treasury Department has adjusted the figures for retirement account savings in 2015, you can take full advantage of the changes and maximize your contributions through a self-directed 401k.
If you're interested in exploring the advantages of CatchFire Funding's self-directed 401k program, feel free to reach out to me. I'm here to help!
Bill Seagraves
President & Founder
CatchFire Funding
bill@catchfirefunding.com
(877) 702-2040
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