Self Directed Individual K or Solo 401k: Retire Well
Choosing an individual k or solo 401k is part of a larger strategy for retirement planning. Saving for retirement includes both choosing a plan for the future and improving your finances now.
Ways to improve your finances now
- Pay down current debts
Pay off debt, as fast and as much as possible. Paying off debts today removes the possibility of being stuck with payments in retirement.
- Make a budget
This is the best way to save money. To save more, you will have to spend less. Making a budget will help you to keep track of the amount you earn and the amount you spend.
- Analyze and modify the budget
Writing down each expense helps you to see which you can do without. And cutting those unnecessary expenses helps you to save on a daily, weekly and monthly basis.
- Lower credit card usage
Choosing a retirement plan
Preparing for retirement includes understanding which retirement vehicle is best for you. Websites like ours can be helpful for this.
When choosing an Individual or Solo 401k provider, it is important to select one who offers truly self-directed plans with checkbook control. This maximizes your investment options and the power of your account. As the trustee of your plan, you are able to make all of the investment decisions without a custodian.
Advantages of an Individual K or Solo 401k over a self-directed IRA
The IRS requires that a trustee (such as a bank or trust company) holds the assets with the IRA on behalf the account owner. A self-directed IRA must be opened with a trust company then that offers self-directed IRAs. Every year, you can contribute up to the maximum contribution amount as defined by the IRS. Once you reach the age of 59 1/2, you can begin withdrawing money. The money withdrawn, if originally pre-tax, will then be taxed upon withdrawal.
In contrast, Individual K or Solo 401k accounts are not required to be opened with a custodian. The plan can be established to be administered by you as the account holder and trustee. Other significant benefits are worth exploring before making the decision.
Keep in mind that it is important for you to get advice from a financial advisor in making investment decisions.