Rollover 401k?

[Guest Ducks]

Hello,

Curious what people have to say about setting up profit sharing plan with 401k arrangement for one person. Rollover contribution comes into plan, loan provisions are put in place, loan is to be taken, contributions are not going to start being made in the non-elective and 401k/401m sources until a few years down the road...

Is this substantial and recurring?

Any thoughts are much appreciated.

Go Ducks!

[Guest JimD]

How about setting up a plan to only allow salary deferrals and amend to allow non-elective at some future date? Or set up a Pension Plan with a 0% contribution rate and convert to a 401(k) at some future date.

[Guest Nautical]

Keogh profit sharing plans: (here is an article I found, hope it helps)

Although you won't save much in administrative costs, you may want to consider this profit-sharing plan. Similar to SEP-IRAs, Keogh plans are mainly employer-funded but are much more flexible than SEPs. Also, of the plans

As a result, the Keogh plan is generally attractive to businesses with several highly paid owners and executives. Law firms and medical practices, for example, tend to gravitate toward it. Although anyone can establish a Keogh plan, it is best for companies with 10 employees or fewer because the funding burden is entirely on the employer.

Unlike a SEP-IRA, which must be set up as a defined contribution plan, Keoghs can be administered as either a defined benefit plan or a defined contribution plan. A Keogh defined benefit plan is limited to the amount needed to eventually produce an annual pension payment for the participant: the lesser of $140,000 or the average compensation for the participant's three highest years of earned income. A Keogh defined contribution plan is limited to the lesser of $35,000 or 25 percent of the participant's earned income for the year. The Keogh plan is even more attractive when combined with a profit-sharing plan and a money purchase plan. But this sort of flexibility could make running a Keogh just as complex and expensive as running a 401(k). If you feel it's worth it, you'll want to hire a consultant with expertise in pension funds to help you set up this plan.

If you decide a 401(k) alternative is best for you, be sure to discuss your choice with your lawyer or financial advisor. Also, keep in mind that choosing a SEP-IRA, a SIMPLE-IRA or a Keogh plan isn't necessarily the last you'll see of the 401(k). As your business con-tinues to grow, you could easily transition your employees into a 401(k) when the time is right.

[Blinky the 3-eyed Fish]

That is one old article. BTW, Keough shmeough, it's an antiquated term.

[MGB]

The article is also completely irrelevant to the question at hand.

(There is no such thing as a "Keogh plan". Congressman Keogh's legislation was prior to ERISA, which pretty much deleted the whole concept. The reference now just means that they are setting up a normal qualified plan.)