1 Person 401(k) Plan - Required Contribution Amount?

[Guest Michael Anderson]

We have a client that wants to set up a 1 person 401(k) Plan. It will start now and run on a short plan year. There will be a rollover from a previous plan. Is he required to make a contribution during the short plan year? If so, what is the minimum? Is there a minimum he must make next year during the regular plan year? If so, what is it?

Thank you for your insight on this topic!

[Archimage]

There is no requirement that you make a contribution unless you write your plan doc that way.

[Guest PensionAdministrator]

Assuming that you want to have a plan year of 1/1 through 12/31: A 401(K) Profit Sharing Plan can be set up now, the Profit Sharing portion be retroactive to January 1st; and 401(K) deferrals and match begin with compensation earned after the Plan Document is signed. There is no minimum contribution required in this type of Plan. However, to maximize benefits available for this plan year, make the plan retroactive to the 1st of the year. The 2004 annual addition is limited to $41,000. Hope this helps.