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Individual 401(k)

Q: Can I start a 401(k) if I'm self employed without employees?

Yes, you can. An Individual 401(k) is designed for a business owner without W-2 employees and, if married, the owner's spouse. This applies to 1099 contractors and freelancers as well.

Q: What are the potential tax benefits?

Employer contributions and plan expenses are generally tax deductible for the business. Pre-tax salary contributions and any earnings are not taxed until withdrawn, and Roth (post-tax) contributions may be withdrawn tax free after age 59�.

Q: Can I withdraw funds or take a loan from my Individual 401(k) account?

Yes. Loans and withdrawals are available if you choose these features in your plan, though you may incur tax penalties and/or fees. For more information, read �Know the facts about loans and withdrawals� (PDF) .

Q: Is there a difference between an Individual 401(k) and a solo 401(k)?

No, both solo 401(k) and Individual 401(k) are used interchangeably.

Q: Is it complicated to open and administer for an Individual 401(k) plan?

Not at all. You can open and set up your account online in about 30 minutes. Full-service recordkeeping, administration and support are provided through Plan Administrators, Inc. (PAi).

Q: What is the difference between Roth and pre-tax contributions?

The difference between Roth (after-tax) and pre-tax contributions is when you pay taxes. With Roth contributions, you make contributions with after-tax dollars. Once the account has been open for 5 years, future withdrawals of both contributions and earnings are tax free unless you withdraw prior to age 59�. With pre-tax contributions, you get a tax break now, reducing your current taxable income. Earnings grow tax-deferred until withdrawn in retirement.

Q: What is the deadline to make a contribution for the prior year?

As an employer, you have until your tax-filing deadline to contribute to your Individual 401(k). Deferrals from your salary or wages must be made during the current calendar year.

Save for retirement while potentially reducing taxes for you and your business

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An Individual 401(k) is a flexible plan offering tax benefits and high contribution limits to self-employed people and owner-only businesses.Footnote ¹

Individual 401(k) Features

Contribute what you're comfortable with as your cash flow permits.

Make contributions that are generally tax deductible by the business.Footnote ¹

Access your money through loans and withdrawals if you choose (taxes may apply).Footnote ²

Take the guesswork out of investing with a menu of funds and model portfoliosFootnotes ^3,4

An Individual 401(k) can help you defer the payment of taxes on a higher level of profits (compared to IRA-based retirement plans), as well as plan for your retirement.

Request a 401(k) proposal popup

Discover affordable and straightforward pricing

Pricing for your businessFootnote ⁵

One-time set up feeFootnote *:

$100

Monthly administration:

$20 or $25Footnote ^†

Footnote *Setup fee is non-refundable

Footnote ^† Business with less than $250,000 in plan assets will pay $20, Business with more than $250,000 in plan will pay $25.

Pricing for individuals with a balanceFootnote ⁶

Monthly recordkeeping feesFootnote ³:

$3.00

Annual asset based costsFootnotes ^††:

0.52%

Footnotes ^†† For investment fiduciary services (0.07%), participant servicing through the call center (0.20%) and account services for the ongoing product management, vendor oversight, trading and custodial services (0.25%).Footnotes ^3,4

Fees example: Molly has $10,000 in her account. This year, she will have approximately $52 withheld to cover the asset-based fee and $36 ($3 x 12 months) for recordkeeping fees.

What's a key difference between an Individual 401(k) and a SEP IRA?

An Individual 401(k) allows you to contribute through salary deferrals as well as employer contributions. This means you can contribute more to an Individual 401(k) than you can to a SEP IRA, which is eligible for employer contributions only.

Learn more about all small business solutions available at Merrill

Get started with an Individual 401(k) in 3 easy steps

Answer a few questions

Tell us about yourself and your business, and we'll customize a plan to fit your needs.

Review your proposal

We'll send you a proposal for your review. If you want, you can modify plan features before purchasing.

Purchase your plan

After reviewing your proposal, you can purchase your plan online in just a few minutes.

Request a 401(k) proposal popup

Need help? Speak with a PAi consultant for step-by-step guidance.
Call 866.890.4177 Mon-Fri 8 a.m. – 5 p.m.

Explore all plans available for small business

Get more details about small business retirement plans available at Merrill and find the one that works best for your needs.

SEP IRA plans at Merrill SIMPLE IRA plans at Merrill Small Business 401(k) plans at Merrill

Interested in getting more details on employer retirement plans?

Compare an Individual 401(k) with a SEP IRA at Merrill.

Frequently Asked Questions

Expand all

Can I start a 401(k) if I'm self employed without employees?

How much can I contribute annually?

You can make contributions as an employee, through salary deferrals, and also as an employer, through contributions made by your business. An employer's contribution cannot exceed 25% of the employee's compensation (if you are self-employed, 20% of your net earnings from self-employment). Also, the maximum combined employer and employee annual contribution is the lesser of 100% of your compensation or $66,000 ($73,500 if you're 50 and older).Footnote ⁷

What are the potential tax benefits?

Employer contributions and plan expenses are generally deductible to the business. Pre-tax contributions and any earnings are not taxed until withdrawn.

Roth contributions are made with after-tax dollars. Earnings are free from federal taxes if you take a qualified distribution. A "qualified distribution" is one that is taken at least five years after the first day of the year of your initial Roth contribution, or Roth conversion, if earlier, and after you have reached age 59½ or become disabled or deceased. If you take a nonqualified withdrawal, any investment earnings on the Roth contributions are subject to regular income taxes, and you may be subject to a 10 percent additional federal tax if you withdraw such earnings before age 59½ unless an exception applies. State income tax laws vary; consult a tax professional to determine how your state treats Roth distributions.

Can I withdraw funds or take a loan from my Individual 401(k) account?

How much does it cost to set up and administer for an Individual 401(k)?

For your business, there is a one-time setup fee of $100 for new plans and $100 for converting an existing 401(k) plan to a Merrill plan. Once the plan is set up, the monthly administration fee is $20 or $25, depending on total plan assets.Footnotes ^{5, 6, 9}

As an employee, you will pay a $3 monthly recordkeeping fee and an annual service fee of 0.52% of plan assets.Footnotes ^{5, 6, 9}

Is there a difference between an Individual 401(k) and a solo 401(k)?

Is it complicated to open and administer for an Individual 401(k) plan?

What is the difference between Roth and pre-tax contributions?

With Roth contributions, you make contributions with after-tax dollars. Earnings are free from federal taxes if you take a qualified distribution. A "qualified distribution" is one that is taken at least five years after the first day of the year of your initial Roth contribution, or Roth conversion, if earlier, and after you have reached age 59½ or become disabled or deceased. If you take a nonqualified withdrawal, any investment earnings on the Roth contributions are subject to regular income taxes, and you may be subject to a 10 percent additional federal tax if you withdraw such earnings before age 59½ unless an exception applies. State income tax laws vary; consult a tax professional to determine how your state treats Roth distributions.

With pre-tax contributions, you get a tax break now, reducing your current taxable income. Taxes on contribution and earnings are due upon withdrawal.

What is the deadline to make a contribution for the prior year?

Can I roll over funds from a retirement account with a previous employer?

Yes. You can consolidate your retirement assets by rolling over 401(k), 403(b), 457 and SEP IRA accounts into a Merrill Individual 401(k). You can also roll over a SIMPLE IRA after you have participated in the account for 2 years.

A Rollover IRA isn't right for everyone. Consider all of your choices and learn if a rollover may be right for you.Footnote ⁸ For additional information, call 888.637.3343.

When are contributions fully vested?

What investment choices are available?

What is the plan establishment deadline?

The deadline to establish an Individual 401(k) plan is the tax filing deadline (including extensions) for your business. However, only a profit sharing contribution could be made retroactively for the first plan year if you wait until the next tax year to adopt the plan. If you want to contribute employee contributions as well, you will want to adopt the plan earlier in the tax year in which you want to contribute.

What's the difference between an Individual 401(k) and a SEP IRA?

What happens if my business grows and I add employees?

Is an IRS Form 5500 filing required, and if so, will you complete the form?

Footnote

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Footnote ¹ For more information, visit the IRS website popup.

Footnote ² Please consider the advantages and disadvantages of taking a loan before initiating one.

Footnote ³ Plan and participant-level administrative and recordkeeping services for Merrill Small Business 401(k) plans are provided by Plan Administrators, Inc. (PAi). Investment advisory and fiduciary services are provided by Morningstar Investment Management LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar Investment Management LLC is a provider of investment management solutions, including investment advisory and retirement plan services. Educational call center support will be provided by PAi. Bank of America Corporation, PAi and Morningstar Investment Management LLC are not affiliated.

Footnote ⁴ Morningstar Investment Management LLC selects the investments and is responsible for the ongoing monitoring and maintenance of the investments and model portfolios. Merrill is responsible for ongoing product management and vendor oversight, as well as trading and custodial services of plan assets and monthly transaction statements.

Footnote ⁵ Fees will be deducted from the business account.

Footnote ⁶ Fees will be deducted from each participant's account.

Footnote

Contribution and compensation limits are subject to a cost-of-living adjustment annually pursuant to the Internal Revenue Code. Contribution and compensation limits for subsequent years may vary.

Footnote

You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment (particularly with reference to employer stock), and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. For more information visit our rollover page or call Merrill at 888.637.3343.

Footnote ⁹ Businesses with less than $250,000 in plan assets will pay $20. Businesses with more than $250,000 in plan assets will pay $25.

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured	Are Not Bank Guaranteed	May Lose Value
Are Not Deposits	Are Not Insured by Any Federal Government Agency	Are Not a Condition to Any Banking Service or Activity

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Other fees may apply. Free and $0 means there is no commission charged for these trades. $0 option trades are subject to a $0.65 per-contract fee. Sales are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. There are costs associated with owning ETFs. To learn more about Merrill pricing, visit our Pricing page.

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Merrill waives its commissions for all online stock, ETF and option trades placed in a Merrill Edge^® Self-Directed brokerage account. Brokerage fees associated with, but not limited to, margin transactions, special stock registration/gifting, account transfer and processing and termination apply. $0 option trades are subject to a $0.65 per-contract fee. Other fees and restrictions may apply. Pricing is subject to change without advance notice.

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

The performance data contained herein represents past performance which does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance information current to the most recent month end, please contact us.

Net Asset Value (NAV) returns are based on the prior-day closing NAV value at 4 p.m. ET. NAV returns assume the reinvestment of all dividend and capital gain distributions at NAV when paid.

Market price returns are based on the prior-day closing market price, which is the average of the midpoint bid-ask prices at 4 p.m. ET. Market price returns do not represent the returns an investor would receive if shares were traded at other times.

Returns include fees and applicable loads. Since Inception returns are provided for funds with less than 10 years of history and are as of the fund's inception date. 10 year returns are provided for funds with greater than 10 years of history.

Before investing consider carefully the investment objectives, risks, and charges and expenses of the fund, including management fees, other expenses and special risks. This and other information may be found in each fund's prospectus or summary prospectus, if available. Always read the prospectus or summary prospectus carefully before you invest or send money. Prospectuses can be obtained by contacting us.

Expense Ratio – Gross Expense Ratio is the total annual operating expense (before waivers or reimbursements) from the fund's most recent prospectus. You should also review the fund's detailed annual fund operating expenses which are provided in the fund's prospectus.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation ("BofA Corp.").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

Are Not Deposits

Are Not Insured by Any Federal Government Agency

Are Not a Condition to Any Banking Service or Activity

Merrill A Bank of America Company Merrill A Bank of America Company

MAP5676695-05112024

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Individual 401(k)

Save for retirement while potentially reducing taxes for you and your business

An Individual 401(k) is a flexible plan offering tax benefits and high contribution limits to self-employed people and owner-only businesses.Footnote 1

Individual 401(k) Features

Discover affordable and straightforward pricing

Pricing for your businessFootnote 5

Pricing for individuals with a balanceFootnote 6

What's a key difference between an Individual 401(k) and a SEP IRA?

Get started with an Individual 401(k) in 3 easy steps

Answer a few questions

Review your proposal

Purchase your plan

Explore all plans available for small business

Frequently Asked Questions

I'd Like to

Discover Merrill

Contact Us

Unlimited $0 Trades

An Individual 401(k) is a flexible plan offering tax benefits and high contribution limits to self-employed people and owner-only businesses.Footnote ¹

Pricing for your businessFootnote ⁵

Pricing for individuals with a balanceFootnote ⁶