New Yorkers know about finances and are always on the lookout for the next investments. A New York Solo 401k plan is an ideal retirement solution for self employed professionals and business owners. The plan gives them not only an option to save for retirement, but also many other advantages.
The New York Solo 401k plan is regulated by the federal government. It is like other retirement plans under the Employment Retirement Income Security Act of 1974 (ERISA), but with many unique features.
A New York Solo 401k plan will offer many benefits that can help plan owners to achieve their financial goals:
1. Ability to contribute more each year
The contribution limit of a New York Solo 401k plan is much higher than an IRA. Self employed people are seen as both the employer and the employee of the business and can contribute as much as $52,000 in 2014. Plan participants of 50 years old and above can also make a catch-up contribution of $5,500 per year.
2. Roth Account option within a New York Solo 401k plan
Instead of creating an entire different plan, small business owners can have a Roth account right within their New York Solo 401k plan. This allows them to make after tax contribution if they wish, and let the money grow tax-free. They can contribute as much as all of the salary deferral plus catch-up contribution, if applicable, to the Roth account.
3. Borrowing from retirement savings
Unlike other retirement plans, a New York Solo 401k plan has a participant loan option, which means small business owners and self employed individuals can borrow from their savings. The interest is going to be paid back to the account, instead of to a third-party lender.
4. Unlimited Banking option
A bank account for a New York Solo 401k plan can be set up with any bank or credit union in the local area.
5. Leveraging real estate investment
The use of non-recourse financing is permitted with a New York Solo 401k plan, giving plan holders an option to leverage their real estate investment. Unlike with an IRA, the use of non-recourse loan to finance investment will not be charge with any Unrelated Business Income Tax.
The New York Solo 401k Plan is becoming more and more popular for these advantages and offers a great, competitive way to invest for retirement.