Self Employment Plan 401k – A Must-Know for New Account Owners

Self Employment Plan 401k

Self Employment Plan 401k

Establishing the Self employment plan 401k is the best decision you could ever make in your goal to securing your financial future. This type of retirement plan could offer a lot of wealth-building opportunities. The best time to open the Solo 401k is now because the longer you have the plan, the more and the better are the benefits. For first time Individual k retirement account owners, there are a few things you need to refresh yourself about.

About the Self Employment plan 401k Contributions

The maximum contribution limit of the retirement Solo 401k plan is considered one of the highest in today’s industry. For instance, the profit sharing component of the contribution for 2015 is as much as $59,000 yearly. This amount is for qualified plan participants who are 50 years of age and older. Plan owners must elect what type of contribution they prefer to make and deadline of election is the 31st of December of the current year. Actual contribution must be made before or by the tax-filing deadline depending on what type of contribution you chose.

About the 401k Checkbook Control

One of the many attractive features of the Self employment plan 401k is the Checkbook Control. This feature allows the account holder to have total control of his/her plan assets. Unlike other retirement plans, the Self-Directed 401k account makes the plan participant his own trustee. Thus, there is no custodian consent necessary in order to access his retirement money for legit investment. Other benefits under the Checkbook Control feature include skipping piles of paperwork and documents and eliminating custodial fees and charges.

About Prohibited Transactions

Account owners of the Solo k retirement plan are given numerous investment options to help multiply their retirement money. There are also tax-exemptions especially if you opt for a Roth 401k rollover. However, there are also prohibited transactions that account participants must avoid at all cost. For instance, using a recourse loan in order to leverage a real estate purchase or investment is not allowed. Plan owners must not engage in such prohibited transactions if they do not want to forfeit their privileges or be subjected to sanctions and penalties.

With the right knowledge of the single participant 401k rules, you can certainly maximize the full potentials of the Self employment plan 401k. Know the fundamentals of this retirement plan and make sure you abide by the rules to avoid prohibited transactions.

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