IRS Publication 560 — Retirement Plans for Small Business
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“Sole proprietor. A sole proprietor is an individual who owns an unincorporated business alone, including a sin- gle-member limited liability company that is treated as a disregarded entity for tax purposes. For retirement plans, a sole proprietor is treated as both an employer and an employee.”
This publication discusses retirement plans you can set up and maintain for yourself and your employees. In this publication, “you” refers to the employer. See chapter 1 for the definition of the term “employer” and the definitions of other terms used in this publication. This publication covers the following types of retirement plans.
• SEP (simplified employee pension) plans.
• SIMPLE (savings incentive match plan for employees) plans.
• Qualified plans (also called H.R. 10 plans or Keogh plans when covering self-employed individuals), including 401(k) plans. SEP , SIMPLE, and qualified plans offer you and your employees a tax -favored way to save for retirement. You can deduct contributions you make to the plan for your employees. If you are a sole proprietor, you can deduct contributions you make to the plan for yourself. You can also deduct trustees' fees if contributions to the plan don't cover them. Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan.
Under a 401(k) plan, employees can have you contribute limited amounts of their before -tax (after -tax, in the Publication 560 (2025) 3
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