BPP Rolls Out New Small Entrepreneurs 401(k) Plan

July 28, 2003 (PLANSPONSOR.com) - BSW Benefit Plans Plus, LLC (BPP) has rolled out a new retirement solution tailored for business owners with no employees other than a spouse.

The Small Business Owner (SBO) 401k-Plan offers unlimited investment options and a choice between self-directed or professional fund management at the financial institution of the participant’s choosing, according to a news release.

The so-called Individual (k) plan is unique in that it is designed explicitly for owner-only businesses and businesses with part-time or seasonal employees that can be excluded from participation in traditional 401(k) plans in accordance with federal law. The product enables small-business owners to contribute significant amounts of income, in some cases more than twice as much as they are allowed under traditional small-business plan regulations.

The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 lifted many of the limits on the amount and deductibility of contributions for 401(k) plans. Prior to that, single-owner businesses were better off saving for retirement in other types of plans. However, EGTRRA effectively put 401(k) plans on an equal—and, in some cases, better—footing compared with other tax-deferred savings plans for sole proprietorships—giving life to a “new” product, the “Individual (k)” or “solo (k).”

BPP Particulars

The BPP plan also allows individuals to squirrel away up to $40,000 annually by maximizing salary deferrals and employers contributions for 2003.   Participants age 50 and older can tack on an extra $2,000 to that annual contribution amount.

BPP is also offering a variety of resources at their Web site ( www.bpp401k.com ) to assist participants and financial advisors.   Those include:

  • A free plan analysis
  • Comparison of a SEP verses the SBO-401k-Plan
  • Online application