One of the reasons why people are delaying retirement is because of their financial obligations to their loved ones. They feel that retiring on time will leave them with no extra money to spend for their family or they may not have enough money to spend for themselves when they retire. The topmost financial obligations retiring Americans worry about is sending their children to college. A survey conducted recently reveals that majority of Americans nearing retirement are “very” concerned about financing their child’s college. For small business owners, taking advantage of 401k self employed plans like the Solo 401k for small business can help them assist their child’s education while having enough money for retirement.
We all know how costly higher education can be, because aside from the tuition fee and miscellaneous expenses, board and lodging, transportation, and personal expenses also add up to the budget. Higher education of your family member or your dependent is considered as qualified education expenses. These are the tuition fee and miscellaneous fees such as activity fees, books, supplies, and equipment needed for the course taken by the child. However, other expenses like room and board, medical, and transportation expenses are not covered by the qualified education expenses.
Know the limits of your Solo 401k self employed plan and contribute as much as you can so that you can get enough on your retirement and some for your financial obligations
Solo 401k for self employed individuals used for qualified education expenses are possible. Taking some funds or making early withdrawals from your retirement plan is not subject to the added 10% penalty if qualified education is the reason. However, to avoid withdrawing funds from your account that will affect the potential earnings it could provide, the Solo 401k loan feature is a much better choice. This way, you can pay back the amount you borrowed from the account thus, replenishing your retirement funds. The best way for you to make sure that your 401k self employed plan will be able to meet your retirement needs while assisting your child to college is to always max out your contribution.
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