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Using a 401k in Your Small Business Retirement Options

Jason Watson, CPA
WCG

By Jason Watson, CPA
Posted Saturday, November 5, 2023

A 401k plan is a defined contribution plan. Specifically, the name 401k refers to the section in the IRS code that allows for retirement plan contributions to give you an instant tax savings. Technically it is Title 26, Chapter 1, Subchapter D, Part I, Subpart A, Section 401, Subsection K.

Subchapter D deals with deferred compensation. Part I deals with pensions, profit sharing, etc. Subpart A deals with the general rule. Section 401 deals with qualified pensions, profit sharing, etc. And Subsection K deals with deferred arrangements. Who knew?

But from there, the 401k plan has several variants and options. We’ll be exploring-

  • i401k, Solo 401k, Solo K, Uni K, Owners Only 401k (and all the marketing terms)
  • Company-Sponsored 401k (when you have a staff)
  • Safe Harbor Provisions for 401k Plan Testing
  • Roth Options with a 401k Plan
  • Two Plans, Rolling Old Plans
  • 401k Plans and Roth IRA Conversions
  • Loans and Life Insurance
  • Age Based or Tiered Profit-Sharing Add-On to a 401k Plan
  • Defined Benefits Pension / Cash Balance Add-On to a 401k Plan
  • SIMPLE 401k (not the same as SIMPLE IRA)

Jason Watson, CPA, is a Senior Partner of WCG CPAs & Advisors, a boutique yet progressive tax, accounting
and business consultation firm located in Colorado serving small business owners and taxpayers worldwide.

     

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