The Roth sub account is one of the many lucrative features of the Solo 401k self-directed retirement plan. It offers a viable and powerful solution to ensure tax-free benefits for the owner’s retirement money. Unlike conventional IRA or SEP plans, this type of sub account uses an after-tax contribution for its funding. After-tax contribution allows the plan owner to embark on investments and grow their money without tax obligations and restrictions.
The Solo 401 k Rules on Roth Sub Account
According to the IRS regulations, the Roth Solo 401 k retirement account gives the benefits of tax-free growth, investment and withdrawal. Its remarkable feature allows powerful tax solutions for long-term ventures. The combined advantages of the Roth IRA and the Individual 401k retirement plans made the Roth 401k sub account highly commendable.
Features of the Roth Solo 401 k
As one of the most recommended retirement plans for small business, the Self-Directed 401 k with the Roth sub feature offers the following:
- Diverse Investment Opportunities – Plan holders could invest their hard-earned money in traditional as well as non-traditional assets. This feature offers diversification of retirement money in various investment fields. Funds from the sub account of the Single-Participant pension plan could invest in private businesses, real estate, precious metals, mortgage notes, tax liens, tax deeds, stocks and bonds and so much more.
- High Contribution Limits – As of 2015, the maximum after-tax contribution allowed per year is $24,000. Ordinary Roth IRA retirement plans in comparison only allow $6,500 as the maximum contribution on a yearly basis. Participants could have much larger savings with higher contribution limits with tax-free benefits. Plan owners could invest, grow and diversify their retirement money and enjoy tax-free income.
- Checkbook Control – This highly commendable feature of the Roth Individual k account allows account holders to have easy and fast access to their retirement money. As the trustee of his own account, plan owners could invest their retirement savings on investments of their choice as simply as wiring funds or writing a check.
Participants of the Self-Directed Individual 401 k retirement plan have numerous options for investment. The Roth sub account of the Solo 401 k boosts their retirement savings a notch higher. It provides tax-free benefits to enjoy income from their investments without tax restrictions and obligations.
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