The 401 k Solo Retirement Plan Basics : What New Plan Owners Must Know

401 k Solo

401 k Solo

Getting the 401 k Solo retirement plan is essential if you are aiming for a more productive and lucrative investment. You can find numerous administrators of this highly recommended pension plan, but only a few could help you boost and maximize your retirement savings. Sense Financial is the dependable and reputable plan provider that has been helping their clientele for years. Hence, if you are looking for a remarkable way to put your hard-earned money in the right place to prepare for your golden years, getting the Self-Directed 401 k plan is a must.

401k How it Works

You need to comply with two main eligibility requirements before you can establish the 401 k Solo. Here are the qualifications to start up your investment and make your finances stable and secure for the future:

  • Presence of Self-Employment – You can qualify for the Individual k plan if you have some form of self-employment activity. Does this mean that you are not qualified if you are working full-time? You can still keep your full-time job but must have self-employment activity on the side if you want to be eligible for the 401k plan for self-employed individuals. Being self-employed means you are working as a consultant or independent contractor. This is possible even with a full-time job.
  • No Full-Time Employees – Being a small business owner means you have a business without any full-time employees. There is however an exemption to this as only you and your spouse could work full-time in your business. Small businesses could be single member LLC, sole proprietorship or multi member LLC.

401 k Solo Maximum Contributions

In order to make the most of the 401 k Solo benefits, you need to understand the annual contribution limit. The employee elective deferral is $17,500 for those below the age of 50 in 2014. Those who are 50 and above are allowed to have an additional catch-up contribution of $5,500. Inclusive of the catch up and profit sharing contribution, the total yearly contribution is $57,500.

Maximize the perks you can get out of the 401 k Solo retirement plan. You can also enjoy tax-free earnings and withdrawal if you rollover your account to the Roth 401k sub account where you can make after-tax contribution. Understanding all the basic requirements and benefits of the plan is the first step to establish a successful retirement future.