Every self employed person strives for a secure and better planned future. The anxiety that follows every new project and event in the personal life of an entrepreneur demands a certain level of stability. Choosing a retirement plan and investing for the future is one of the places to start. A self directed 401(k) retirement plan targets self-employed individuals and small business owners. The retirement plan comes with a basket of benefits starting with higher contributions (up to $53,000 for plan participants under the age of 50 and $59,000 for plan participants over the age of 50), loaning facility, multiple investment options, and checkbook control.
Understanding the advantages of self directed 401(k)
It is one of the most popular plans offering self-employed professionals an opportunity to invest in a variety of sectors as per their choice. It doesn’t restrict you to stock or mutual funds and helps you to diversify portfolio by providing non-conventional investment options.
Let us start by looking at some of the primary features of a self directed 401(k) retirement plan.
- Loaning feature: In this plan, a participant would be able to borrow up to $50,000 or 50 percent of the value of your account for any sort of financial needs. This loan is available at prime rate plus one percent interest and can be repaid over a period of five years.
- Ease of administration: The self directed 401 (k) plan is quite flexible and easy to operate. There is no headache of annual filings unless your plan exceeds $250,000.
- Availability of Roth conversion: You can convert your self directed 401(k) to a Roth retirement plan.
- Portfolio Diversification: With a self directed 401(k), you would be able to invest in an entirely new world of investment opportunities like hard money, private businesses, precious metals, real estate etc.
- Asset protection: The self directed 401k plan is protected in case of a bankruptcy. Apart from bankruptcy, state law will check whether self directed solo 401k plan assets are protected from creditors.
Considering these benefits, it is easy to understand that self directed 401(k) is one of the best retirement options for self employed individual. It helps you to take control of your retirement fund without losing even a single penny out of your hard-earned savings. Further, you don’t need custodian consent for making any of these investments. With the checkbook control feature, investing is as simple as writing a check. If it sounds like an investment plan that you are interested to get into, seek a financial advisor or retirement plan provider to start today.
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- Self employed pension
- Small business retirement plans
- Small business 401k