T. Rowe Price in Baltimore said Monday that it has started an individual 401(k) plan that lets self-employed people and small-business owners with no employees other than a spouse to save more for retirement.
An Individual 401(k) lets business owners add salary deferral contributions on top of the permitted employer contribution, which is generally 25% of net business income. As a result, an unincorporated business owner may be able to make bigger contributions than he or she could to other types of retirement plans.
The maximum contribution to an individual 401(k) this year is $41,000 and next year, $42,000. This includes both the salary deferral and the employer contribution.
