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Corporate Services: Retirement Plan

What is it?

The Individual 401(k) is a retirement savings option that qualifies as an IRS-approved and ERISA-governed platform. It is designed for self-employed individuals or the sole owner-employee of a corporation where there are no full-time employees other than themselves and their spouse. An Individual 401(k) is sometimes referred to as a Solo 401(k), a Uni 401(k), or a one-participant 401(k).

Set up an E*TRADE Account

You can set-up your E*TRADE retirement account by completing the E*TRADE Individual 401(k) Account Application and returning to E*TRADE for processing. Your E*TRADE account(s) will be available to receive contributions (rollovers, payroll contributions and profit sharing contributions) within three business days following receipt of completed application.

Start or Modify Contributions – Personal and/or Profit-Sharing

MBO will process your request and convey the funds into your E*TRADE account within 3 business days of receiving the completed enrollment form.

Individual 401(k) Contribution Limits

The contribution limits in an Individual 401(k) with one participant are the same as a traditional 401(k) plan. The personal deferrals can be split between traditional pre-tax and Roth after-tax contributions. Consult with your financial advisor to determine your optimal retirement contribution strategy.

See below for a few scenarios to consider:

Scenario 1: Maximum Personal Deferral, Maximum Profit-Sharing

Total maximum retirement contributions = $58,000 ($64,500 if age 50 and up)

  • $19,500 max personal deferral ($26,000 if age 50 and up)
  • $38,500 max profit-sharing contributions (not to exceed 25% of gross compensation)

Scenario 2: Zero Personal Deferral, Maximum Profit-Sharing

Total maximum retirement contributions = $58,000

  • $0 personal deferral
  • $58,000 max profit-sharing contributions (not to exceed 25% of gross compensation)

Scenario 3: Maximum Personal Deferral, Zero Profit-Sharing

Total maximum retirement contributions = $19,500 ($26,000 if age 50 and up)

  • $19,500 max personal deferral ($26,000 if age 50 and up)
  • $0 profit-sharing contributions

Tax Comparison: Traditional vs. Roth 401(k) Contributions

Traditional 401(k) contributions

Roth 401(k) contributions

Personal Deferral

Pre-tax dollars

After-tax dollars

Taxation of Distributions

Entire distribution (including contributions and earnings) is taxable

Qualified distributions (including contributions and earnings) are tax free

Value of MBO’s Retirement Plan

Maximize your retirement savings through MBO’s partnership with E*TRADE. After reviewing several Individual 401(k) vendors, MBO selected E*TRADE as the partner of choice for providing maximum flexibility and customer experience. The retirement plan offers:

  • No minimum initial deposit
  • No annual fees and no account minimums
  • Ability to borrow against your retirement assets
  • 401(k) rollover or asset transfer from another plan (such as the MBO plan, SEP IRAs, SIMPLE IRAs, Profit Sharing and Money Purchase plans, which can all be rolled into the pre-tax Individual 401(k) account)
  • Roth Individual 401(k) contributions
  • Brokerage options

Additionally, MBO has negotiated exclusive savings for Corporate Services clients including:

  • Special pricing with stock and ETF trades, along with low transaction fees on leading mutual funds
  • Ask about other incentives, including sign-on bonuses, when setting up your account with E*TRADE

E*TRADE Individual (or “Solo”) 401(k) vs. a SEP IRA

Individual 401(k)s have a higher contribution limit and can be more flexible than the SEP IRA. Individual 401(k)s allow for up to $63,000 in contributions for those over 50 years old – SEP IRAs max out at $57,000. Individual 401(k)s also allow for contributions from both the employee and employer, while the SEP IRA only allows for employer contributions. Lastly, Individual 401(k)s are the only plan type that will allow for loans, so you will have the ability to borrow against your retirement assets if needed.

Employee Contributions

  • Contributions are made at the employee level as a payroll deferral
  • Contribution is either made pre-tax into a traditional 401(k) or post-tax into a Roth 401(k) account
  • 2021 annual limit is $19,500 ($26,000 if age 50 or older)

Profit-Sharing Contributions

  • Discretionary employer contribution
  • Contributions are tax deductible
  • Contributions are made at the corporate level from the balance in your MBO Business Center
  • One-time contributions or you can setup to recur automatically
  • 2021 annual limit is $58,000 ($64,500 if age 50 or older), not to exceed 25% of the employee gross pay

Check out even more benefits offered by E*TRADE designed especially for MBO clients.

Want to check out individual funds? Review the E*TRADE All-Star List to help you get started today.

For questions about this program, investments or fees, contact an E*TRADE support specialist at 1-866-789-0726. You can also contact MBO’s designated E*TRADE Account Manager, David Lea, at 202-683-9108 or

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