WHAT IS A SOLO 401k?
A Solo 401K is a Small Business Owners #1 option when it comes to saving for retirement or when you decide to put your retirement dollars to work for you. It allows you the option to utilize retirement funds to make virtually any type of investment on your own, offers higher annual contribution limits than traditional IRA plans (up to $60,000), and allows you to borrow up to $50,000 for any purpose, with no out-of-pocket setup fees.
Why haven’t I heard of this?!? Don’t be alarmed, many CPA’s, well-seasoned investors, and tax professionals are just now catching up to the Solo 401K wave. The Solo 401K has been around since 1962 but it wasn’t until a 2001 decision by Congress that allowed entrepreneurs and small business owners alike to better plan for Financial Freedom. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) revamped the then 401k “norm” and updated the Solo 401k which opened unlimited investment opportunities and benefits that were reserved for traditional employer sponsored 401k plans. The Solo 401K, gives you the freedom that every American deserves, the freedom to obtain Financial Freedom while taking control of your future to ensure you Retire Happy.
There are countless benefits that arise from establishing your Solo 401K in order to ensure you are on the track to enjoy life during a time when so many Americans are still working in order to meet the basic daily needs. Knowledge of this timely resource and your ability to act now will be one of the best financial decisions you ever make.
Below are a few of the many benefits a Solo 401K can deliver.
· High Contribution Limits
· Unlimited Investment Opportunities
· Loan Option
· Ability to Self-Direct your retirement funds
· Flexible Contribution Options
· Roth-Type Contributions
· After – Tax Contributions
· Cost- Effective Administration
· Tax Deductions
· No Tax on Non-recourse Leverage for Real Estate Acquisitions
The Solo 401(k) plan can be utilized by anyone who is currently a business owner or intends to establish a business and does not plan to have full-time employees. The Solo 401(k) plan is ideal for entrepreneurs, independent contractors, consultants, real estate agents, and semi-retirees. The owner’s spouse may also contribute to the plan as long as he or she is an employee of the business.
There are 2 specific eligibility requirements for the solo 401k
1. The presence of self-employment activity
2. The absence of full-time employees
Note: You are not required to own your own business or be incorporated in any way.
How Much Can you Save?
For 2017, the annual contribution limit is $54,000.00 with an additional $6,000.00 catch up contribution for those over fifty ($60,000.00). When a spouse participates in the same Solo 401 (k) plan he or she can make separate and equal contributions. In 2017 that contribution limit is set to $108,000.00 or $120,000.00 if both spouses were able to max out their contributions.
A Lifetime of Unlimited Investment Opportunities:
· Residential or Commercial Real Estate
· Domestic of Foreign Real Estate
· Raw Land
· Foreclosure Property
· Mortgage Pools
· Private Loans
· Tax Liens
· Private Businesses
· Limited Liability Companies
· Limited Liability Partnerships
· Private Placements
· Precious Metals and Certain Coins
· Stock, Bonds, and Mutual Funds
· Foreign Currencies
· As of 2016, there are believed to be an estimated 50 million people participating in a 401k plan
· As of 2015 4.7 trillion held in 401k accounts
· 513,000 different 401k plans
ACCOUNT SETUP FORMS
SELF DIRECTED SOLO 401(K)
If the employees of your company consist of no one other than yourself and possibly, your spouse, then a Solo 401k, also known as an Individual 401(k) plan, has been specifically designed just for you. Assuming you plan to maintain this strict limit on employees in the future.