The SBO-401(k) can only be adopted by businesses in which only the business's owners are eligible participants in the plan. The ideal candidate for the SBO-401(k) is an employer who has employees, they do not satisfy both criteria for being included in the plan. To be eligible, a person must work at least 1,000 hours each year, but there may be age restrictions. To be sure, you should check the provisions of the SBO-401(k) plan document that you intend to adopt. Most of these documents include a hard-coded definition of "eligible employee".


Note: Bear in mind that if you have other businesses, you may also need to take those businesses into consideration. Ownership in other businesses may affect your eligibility to adopt a SBO-401(k) plan.

To learn more, read 401(k) Plans For The Small-Business Owner and Plans The Small Employer Can Establish.

This question was answered by Denise Appleby
(Contact Denise)

  1. What are the risks of rolling my 401(k) into an annuity?

    Though the appeal of having guaranteed income after retirement is undeniable, there are actually a number of risks to consider ... Read Full Answer >>
  2. How does a Roth IRA grow over time?

    Your Roth IRA account grows over time thanks to two funding sources: contributions and earnings. While your contributions ... Read Full Answer >>
  3. Can my 401(k) be seized or garnished?

    As long as your retirement funds are held in your 401(k) and you do not take them as distributions, your 401(k) cannot be ... Read Full Answer >>
  4. Can my IRA be taken in a lawsuit?

    Whether your IRA can be taken in a lawsuit depends largely on your state of residence and the judgment in question. There ... Read Full Answer >>
  5. Are mutual funds considered retirement accounts?

    Unlike a 401(k) or Individual Retirement Account (IRA), mutual funds are not classified as retirement accounts. Employers ... Read Full Answer >>
  6. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
Related Articles
  1. Retirement

    10 Ways to Save Your Retirement: It's Not Too Late

    It's not too late to start saving for your retirement, even if you took longer to start thinking about it and doing something about it.
  2. Investing

    Why Is Financial Literacy and Education so Important?

    Financial literacy is the confluence of financial, credit and debt knowledge that is necessary to make the financial decisions that are integral to our everyday lives.
  3. Investing

    10 Ways to Effectively Save for the Future

    Savings is as crucial as ever, as we deal with life changes and our needs for the future. Here are some essential steps to get started, now.
  4. Professionals

    How to Protect Your Portfolio from a Market Crash

    Although market crashes are usually bad news for your portfolio, there are several ways to minimize losses or even profit outright from market movement.
  5. Retirement

    How Robo-Advisors Can Help You and Your Portfolio

    Robo-advisors can add a layer of affordable help and insight to most people's portfolio management efforts, especially as the market continues to mature.
  6. Professionals

    How Advisors Can Carve Out a Social Media Niche

    Social media is a great way for financial advisors to build a brand and potentially generate leads if it’s properly used. Here are some tips.
  7. Professionals

    3 Benefits of Working Longer (and Retiring Later)

    There are many reasons why folks in their 60s may want to keep working until at least age 70. Here are three.
  8. Investing

    How Aliko Dangote Became the Richest African

    An overview of how Aliko Dangote turned a local commodities trading business into a billion-dollar conglomerate.
  9. Retirement

    How Are 401(k) Withdrawals Taxed for Nonresidents?

    As a U.S. nonresident, deciding what to do with your 401(k) after you return home comes down to which tax penalties, if any, you're willing to incur.
  10. Retirement

    Why Are Annuities Important for Retirement?

    Understand how annuities work, and identify the benefits they provide for retirement, the most salient being a guaranteed income stream for life.
  1. Operating Cost

    Expenses associated with the maintenance and administration of ...
  2. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  3. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  4. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
  5. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  6. Per Transaction Fees

    An expense a business must pay each time it processes a customer’s ...

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!