With a good retirement plan, you are also assured of a lucrative, fruitful and productive future. It is about time you decide what is best for you and your family. The 401k information could provide some of the most helpful and useful tips and fundamental must-knows about the Solo 401k retirement plan. What do you need to know about this retirement policy?
The Individual 401k Plan Up Close
Here are some of the important things you need to know about the Owner-Only retirement plan also known as the Solo 401k:
The 401k Limit for Contribution
For policy owners who are below 50 years old, the contribution 401k limits is $17,500 per year. This is a value considered as multiple times bigger than the usual retirement plan contribution. However, for those who are above 50 years old, the contribution per annum could be much bigger because of the catch-up value which is $5,500. Thus, the overall total contribution on a yearly basis for policy owners who are above 50 years of age is $23,000. Moreover, an additional 25% contribution for profit-sharing component is and must not exceed the amount of $56,500.
The 401k Information on Plan Loans
One of the many upsides of the Individual 401 k policy is that you can borrow your retirement funds or savings. This means that you can use your savings to fund or utilize in various options such as investment on real estate or paying off debts, bills and many others. The flexibility of options where you can spend or use your money is countless. Nonetheless, it is essential to understand and remember that the loan requires a particular date or deadline for pay off. For instance, you need to pay back the loan in a quarterly manner. This is inclusive of the current Prime interest rate. Moreover, the interest must also be paid off in full within 5 years and the default of the loan could also incur certain penalties from the IRS.
Who is qualified for the Solo 401k Retirement Policy
There are two main eligibility requirements according to the 401k information to establish the Owner-Only retirement plan especially from well-known administrators such as Sense Financial. First, you have to be self-employed and if employed with a company, you have to be an independent contractor or consultant. Second, you need to be a small-business owner wherein your company does not have any full-time employee except your spouse.