The Super-Simplified 401(K) Plan: A Good Choice for Today's Self-Employed.

As a small business owner you should be both interested in and concerned about two prevailing and converging trends in the American workplace: the job growth created by small businesses and the responsibility of individuals for their own retirement planning. If you’re a business owner with no employees other than co-owners or spouses you may wish to consider establishing a Super-simplified 401(k) plan for your business. As a small business owner, you can enjoy the same 401(k) retirement plan benefits currently provided to millions of other Americans.

If saving as much as you can for retirement is a prime concern, a Super-simplified 401(k) may be an appropriate choice for you. With a Super-simplified 401(k) you are permitted to make profit-sharing contributions up to 25 percent of your compensation for incorporated businesses or 20 percent for unincorporated businesses, subject to a $225,000 compensation cap in 2007. Plus, you may make an additional $15,500 salary-deferred contribution, and if you are over age 50, that amount increases to $20,500. The combination of profit sharing and salary-deferral contributions for 2007 may not exceed $45,000 ($50,000 if you are age 50 or older). For many business owners a 401(k) allows for larger annual contributions than other retirement plans, including SEP IRAs, SIMPLE IRAs and Keoghs.

The Super-simplified 401(k) plan can make saving for retirement easier. Some fully selfdirected plans, for example, may allow for a wide range of investment opportunities, including stocks, bonds and mutual funds. They may also provide a loan provision and allow you to transfer other retirement accounts, including Keoghs, SEP IRAs and traditional IRAs (excluding after-tax balances), into your Super-Simplified 401(k) account.

This article is provided courtesy of Morgan Bonnell and Don Grant. Both are financial advisors with Smith Barney located in Wichita, Kan., and may be reached at 800.365.4888. We invite you to call and ask for a complimentary publication, The Super-simplified 401(k) Plan, to begin to understand the unique options available to you today.

Citigroup, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matters(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Smith Barney is a division and service mark of Citigroup Global Markets Inc. Member SIPC.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANKGUARANTEE • MAY LOSE VALUE

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