In order to set up a Solo 401k plan, it is essential to know the basics of this lucrative retirement plan. There are fundamental things to learn about the self-directed 401 k from eligibility requirements to maximum contributions and so on. In opening a 401 k retirement account, the goal is not just to secure your retirement. Wealth-building through numerous investment options is a great possibility with the Solo 401 k.
How to qualify?
There are two ways you can qualify for the Individual k:
- Small Business Ownership. Business owners must comply with this requirement particularly in not having any hired full time employees. However, the business owner and his/her spouse are exempted to the rule.
- Self-Employed. Self-employment activities must be proven. Those who are qualified under this requirement are individuals working as consultants and independents contractors such as physicians, real estate brokers and agents and the likes.
Who will set up a solo 401k plan?
You can find numerous plan administrators that can help you establish and open a single-participant 401k. It is best to find a trusted and dependable company that would also facilitate the transaction and help you maximize the full potentials of your retirement account.
What are important contribution facts to know about?
The maximum contribution after you have set up a Solo 401k plan is $18,000 for salary deferral. An additional $6,000 catch-up contribution is allowed for participants who are 50 years old and older. A total of $59,000 annual maximum contribution, including the additional profit sharing component, is allowed. The deadline for the election to make contribution is December 31 of the current fiscal year. However, participants still have until the tax-filing deadline to make his actual contribution.
Numerous Investment Choices
One of the most appealing features of the Solo 401k retirement plan for small business is its capacity to grow through investment options. Plan owners could use their retirement savings to invest particularly in real estate. On top of the numerous real estate options, they can also invest in stocks and bonds, precious metals as well as hard money lending and other options.
Putting your retirement money in the right place is the first step to a secured future. The best time to start and set up a Solo 401k plan is now. Knowing the different fundamentals of the Individual 401 k plan is your initial step to ensuring your financial growth.
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