Putnam Individual 401(k)

A low-cost, full-service plan that helps self-employed individualsmake the most of their retirement savings

The opportunity

Tax law changes that passed as part of the EconomicGrowth and Tax Relief Reconciliation Act (EGTRRA) allowcertain self-employed individuals to contribute signicantlymore to their retirement savings. The Putnam Individual4(k) is a low-cost, full-service plan that is easy toadminister and oers substantial benets over traditionalretirement plans.

The prospects

The plan is available to businesses that employ owners andtheir spouses only. This includes incorporated and unincor-porated businesses, such as sole proprietors, partnerships,and corporations. Consider these prospects:

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Consultants • Doctors

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Lawyers • Electricians

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Accountants • Programmers

COMPARE INDIVIDUAL 401(k) HIGH CONTRIBUTIONLIMITS TO OTHER POPULAR PLANSBusiness owner’s011 wage SIMPLE IRA SEP IRAIndividual401(k)$25,

$12250$6250$22750

5,

130001250029000

,

1500250001500

5,

16000375009000

2,

1750090009000

Source: Putnam Research based on 2011 IRS limitations.Chart assumes compensation is W-2 income. Lower limits may apply to SEP and Individual 401(k)s where compensation constitutes self-employment income. Chart also assumes no catch-up contributions aremade. SIMPLE IRA contribution amounts reflect a 3% match formula.Lower limits may apply if wages constitute self-employment income.

The benets

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Employer/owners may contribute up to 4, in ,depending on their compensation, by making. Salary deferrals of up to ,, not to exceed %of compensation; or. Company contributions of up to % of compensation(or up to % of self-employment income).

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Catch-up contributions up to , (for a totalcontribution of up to 4, for ) can bemade by those age  and older.

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Choose to save pretax or after-tax with the plan’s Roth4(k) feature. Roth 4(k)s can also be rolled over intoRoth IRA accounts, where annual minimum distributionsare not required. Taxes on contributions and earnings aredeferred until withdrawn. Withdrawals prior to age ½may be subject to an additional % tax.

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Flexible plan prototype: The plan’s seamless amendmentprocess makes it easy to include additional employeeswhen a company grows. Additional administrativeresponsibilities, contribution obligations, and servicefees may apply.

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Rollover contributions are allowed from the followingplans: SEP, SARSEP, SIMPLE IRA (after two years),Traditional IRA, Rollover IRA, Keogh, 4(k), 4(b),and 4 (governmental only).

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Loans are available through the plan.

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The plan will accept contributions that are submitted onlinevia the ACH (automated clearinghouse) method or that aremade by check.