Contribute More, Retire Sooner

Individual(k) plans can have potentially higher contribution limits than SEP-IRAs and SIMPLE IRAs. The chart below shows how much more can be invested in an Individual(k) plan: Chart assumes business owner is under age 50 and therefore cannot make "catch-up" contributions. The maximum contribution limit may be lower for individuals with self-employment income.

Salary Deferrals

Pacific Life Individual(k) participants have the option to designate their Individual(k) contribution as a pretax salary deferral or an after-tax Roth 401(k) contribution. Before a Roth 401(k) contribution can be made, the plan sponsor must amend the plan. A Roth 401(k) contribution is an after-tax employee salary deferral amount. Assuming certain requirements are met, future distributions, including earnings, will be tax-free. Traditional 401(k) contributions are pretax salary deferral amounts. When distributed, these pretax salary deferral amounts and any subsequent earnings are taxed to the participant.

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