Starting an ABG Solo(k) Plan is Simple!

The ABG Solo(k) is a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan. Owner-only businesses, partnerships, and self-employed individuals can save more for retirement through a 401(k) plan that is designed specifically for them! In order to qualify for an ABG Solo(k) Plan, an individual must claim some self-employed income. However, he/she does not need to work full-time in a self-employed capacity. A common example of part-time self-employed income is an individual who works for an employer, but also does a little consulting on the side. The consulting income would be considered self-employed income, thereby rendering the individual’s business eligible for starting an ABG Solo(k) Plan.

An ABG Solo(k) may substantially reduce your current income taxes because generally, you can deduct the entire amount of your plan contributions from your taxable income each year.
  • If your business is unincorporated, you can deduct contributions for yourself from your personal income.
  • If your business is incorporated, you can generally deduct contributions as a business expense.
No Plan ABG Solo(k) Plan
Net Business Profits $100,000 $100,000
Less Deduction for ½ Self-Employment Tax -7,065 -7,065
Less Max. Contribution (25% of earned income) -0 -18,587
Less Salary Deferral -0 -18,000
= Taxable Income $92,935 $56,348
Taxes Due $19,059 $9,858
Taxes Saved $0 $9,201
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