SBO 401K for Partnership Businesses: Easy Method of Making Retirement Contributions

I run a small business partnership with two others. Am I limited to the SIMPLE IRA for retirement planning or is there any 401k plan that I can go for?Chris Epperson, Arkansas

A SIMPLE IRA is a good retirement plan for your business if you have employees who meet eligibility requirements that you have set for your company sponsored retirement plans. For example, consider that in addition to your business partners, you also have employees who are employed with your business for 5 years and are above 21 years of age. Then you have to make the retirement plan available to them as well.

If your business does not employ any more people other than yourself and your partners, then you have yet another option open to you- the SBO 401k. The SBO 401k or Small Business Owner 401K is a retirement plan especially designed for business owners like you who do not have other employees who qualify for the plan. You and your partners are considered business owners for the purpose of the plan, irrespective of the terms of your partnership.

You can make contributions from your salary to this 401k plan as well as opt for a profit sharing contribution. That is, a part of the salary you draw from your business in your capacity as partner is deposited into the account. In addition, a predetermined portion of the profits is also added in lieu of the ‘employer contribution’ that is made with regular 401ks.

The best part about SBO 401ks is that it is easy to set up the plan, administer it, and track the deposits and withdrawals you make from it. There are several options you can choose for online DIY SBO 401ks but make sure that you partner with a reliable provider like The software that this site provides helps you manage the plan easily, conveniently and quickly. This package is adaptable and flexible too, allowing you to choose from a range of investment options to park your 401k funds in.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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