Personal §401(k) / Roth §401(k) Accounts
Legend’s Personal §401(k) plan was designed to provide self-employed individuals and their spouses who work in the business with the opportunity to
invest in a tax-advantaged retirement program. The plan is available to sole proprietors and partnerships that do not have any common law (non-spousal)
employees, including C Corporations, S Corporations and sole proprietorships. By making regular contributions to a Personal §401(k) account, you have a
convenient means to enhance your retirement savings as you work toward building your financial future.
How do Legend Personal §401(k) plans operate?
- You determine the investment options available in the plan.
- You decide how much you wish to invest each pay period, how your contributions will be allocated among the available investment options, and later, how your assets will be distributed.
- The Legend Group® establishes the plan in accordance with your instructions and directs your contributions to the appropriate investments. When you are eligible to begin withdrawing from your account, Legend distributes your funds as you advise.
Traditional §401(k) accounts vs. Roth §401(k) accounts
- With a traditional §401(k), contributions are made via pre-tax payroll deductions, and both contributions and investment earnings are treated as tax-deferred until withdrawal.1
- Legend Personal §401(k) plans also offer Roth §401(k) accounts, providing you with the option to build tax-free retirement income. While Roth §401(k)s are funded with after-tax dollars, these accounts may grow tax-free, and all qualified withdrawals are tax-free.2
- Contributions may be made to a Roth §401(k) account in addition to, or in place of a traditional
§401(k) account, and your
maximum annual contribution limit may be divided between the two accounts in any manner you wish.
1Distributions from a traditional retirement account are subject to ordinary income taxes in the year distributed.
Distributions prior to age 59½ may incur an additional 10% penalty.
2In order for the Roth §401(k) account to be distributed tax-free, it must be funded for a minimum of five years and the account holder must have attained age 59½. A participant would also qualify for tax-free distributions if the account was held for five years and the account owner became disabled (under the strict definition of disability of §72(p) of the IRS code). Furthermore, in the event of the account holder’s death, beneficiaries would receive tax-free distributions if the account was held for at least five years. Otherwise, the distribution would be treated as part return of principal and part taxable earnings.
A 10% premature withdrawal penalty may apply to the earnings.
Legend Equities Corporation and its affiliates do not provide tax or legal information or advice.