In today’s Podcast, Prashant Kumar, on behalf of Cash Flow Champs invites Damion Lupo to guide us through “The Ultimate ……(read more)

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If you are a small business owner, you may have heard of the eQRP and solo 401(k) retirement plans. Both are tax-advantaged retirement plans, but there are some key differences between them. Understanding the differences between the two can help you decide which one is best for you and your business.

An eQRP, or Employer Qualified retirement plan, is a type of retirement plan that allows employers to contribute to their employees’ retirement accounts. It is a type of defined contribution plan, meaning the employer contributes a set amount of money to the employee’s account each year. The employee can then choose how to invest the money, typically in stocks, bonds, mutual funds, and other investments. The employer also has the option to match employee contributions, up to a certain amount.

A solo 401(k) is a retirement plan designed specifically for self-employed individuals or small business owners with no employees. This plan allows the business owner to make both employee and employer contributions. The employer contributions are limited to 25% of the business owner’s income, up to a maximum of $58,000 in 2021. The employee contributions are limited to $19,500 in 2021.

The main difference between the two plans is that the eQRP is designed for employers with multiple employees, while the solo 401(k) is designed for self-employed individuals or small business owners with no employees. The eQRP also allows for employer matching contributions, while the solo 401(k) does not. Additionally, the solo 401(k) allows for higher contribution limits than the eQRP.

Both the eQRP and solo 401(k) are excellent retirement plans for small business owners. The best plan for you will depend on your individual situation and goals. If you have multiple employees, the eQRP may be the better option. If you are self-employed or have no employees, the solo 401(k) may be the better choice. Whichever you choose, you will be taking an important step towards a secure retirement.