Walter Updegrave, a financial columnist, for CNN Money.com writes about the Solo 401(k) for self-employed individuals. Combined with a profit sharing component, this type of defined contribution plan can produce the largest contribution compared to other defined contribution plans. Mr. Updegrave makes this point by comparing the Solo 401(k) to a SEP using the example of a self-employed individual, age 50, who has $50,000 in earned income.
A $20,000 difference as shown below:
|Maximum Profit Sharing||$10,000|
|Maximum 401(k) Catch Up||$ 5,000|
Here is the link to Mr. Updegrave’s article.