The small business 401k pension plan is one of the highly recommended retirement plan types. This is a lucrative way of investing your money on a wide range of industries and investment opportunities.
Qualifications to Establish the Small Business 401k
The Self-directed 401 k pension plan obliges plan applicants to comply with the following eligibility requirements:
- You must be a small business owner. This requirement obliges plan applicants to prove that they own a company without the presence of full time employees except for the business owners and their spouses.
- You must be self-employed. According to the provisions of this qualification requirement, plan owners must prove their self-employment activities. As defined, self-employed individuals are those working as consultants or independent contractors. This however means that the self-employed person could still have a fulltime job as long as he can prove his self-employment activities.
Benefits of the Individual k Plan
The Self-Directed k plan is highly recommended and appealing to participants because of its remarkable features such as the following:
- Easy retirement savings access. The Checkbook Control feature of the Single-Participant 401k plan makes it easier and faster to direct your retirement money. Plan owners are the trustees of their own account which means no necessity for any custodian consents during transactions.
- Contribution limit is ten times higher than ordinary IRA. As of 2015, the maximum yearly contribution limit for the small business Solo 401 k is $18,000 for salary deferral of participants younger than 50 years old. Plan owners who are 50 years and older are allowed an additional $6,000 for catch up contribution.
- Flexible investment options are allowed. Plan owners are allowed to use their retirement savings on legit transactions such as in real estate. Other fields of investment include precious metals, bonds and stocks, tax liens and notes.
Types of Retirement Plans
There are other retirement plans available but not all of them have the same benefits that the Solo 401 k offers:
- Individual Retirement Arrangements or IRA
- 403(b) Plans
- Profit-Sharing Plans
- Roth IRAs
- Money Purchase Plans
- SEP Plans
- SIMPLE IRA Plans
- SARSEP Plans
Reputable and trusted Small business 401k administrators could help you establish the Solo k retirement plan and maximize its full potential for wealth-building purposes. Before plunging into the world of the Individual k retirement plan, there are important things to know and comply with.
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