Self-Employed Lives Matter!
In 1978 our tax code was amended to allow the creation of a tax-deferred savings vehicle for employees. It was defined under section 401(k) of the Internal Revenue Code, and quickly became one of the best known employee benefits. Known as the 401(k) plan, it was great for individual investors because tax-deferred growth was a huge benefit over the long haul, was great for employers because it allowed more flexibility than pension plans, and (I'd say) it was also great for the economy as well. Massive employer matched investments fueled a great stock market bull. It was a win-win all around!
There were, however, some drawbacks. The plans were subject to ERISA rules, which defined specifically how the plans could and could not be implemented along with contribution limits and other administrative details. Discrimination between one employee and another was absolutely not allowed, which is a good thing. One of the rules that many didn't like was that self-employed people had no access to this powerful retirement savings vehicle.
In 2001 that changed with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), and the personal, or Solo 401(k) was born. Now the self-employed worker can take advantage of this powerful savings vehicle too.