The Basics — Self-Directed 401K Plans

What is an Individual 401K?

It is simply that.  If you are self-employed without any full-time employees (other than a spouse that can be employed), you can qualify for your own 401K plan.  In fact, even IF you are employed in a W-2 position, but have additional self-employment activities and income, you can participate in your own individual 401k plan. So, whether you are a Sole Proprietor or incorporated (e.g, c-corp, s-corp, LLC), you can have your own 401k and direct your own retirement assets.

How Do I Qualify for the 401k under IRS Regulations?

More importantly, how does the IRS define a self-employed individual?  And for those of you who just want it spelled out to you, the IRS defines self-employment as:

  • You carry on a trade or business as a sole proprietor or an independent contractor.
  • You are a member of a partnership that carries on a trade or business.
  • You are otherwise in business for yourself (including a part-time business).

Just remember, if you meet these criteria, you can establish your own 401K and self-direct your own retirement assets!


Learn More — The advantages of establishing a 401K!