Small Company Retirement Plan 401k โ€“ Helpful FAQ Topics Discussed

Small Company Retirement Plan 401k

Small Company Retirement Plan 401k

The Small Company Retirement Plan 401k is one of the most attractive accounts for those who are looking for lucrative investments. This type of retirement plan offers remarkable returns especially when used with the right transactions. Before you establish the Individual k account, make sure you know the fundamentals of using and maximizing the plan.

Here are some of the FAQs that will help you learn more and understand the Owner-Only 401k retirement plan:

Are you eligible to open an account?

There are two important eligibility requirements to comply with in order to establish the self-directed 401k. First, you need to have proof of your self-employment activities. Based on the Solo 401 k rules, a self-employed individual are consultants or independent contractors such as real estate agents and brokers, physicians, and the likes. Second, you must have no full time employees if you are a small business owner. Exemptions to this rule are the business owner and his/her spouse.

Where can you invest the Small Company Retirement Plan 401k funds?

There are numerous investment options where you can watch your money grow using the 401k plan for small business owners. You can use your retirement savings to invest in real estate, foreign currencies, stocks and bonds, precious metals, and so much more. As long as you do not engage in prohibited transactions, you will enjoy the perks of the profit sharing 401k.

How much is the maximum contribution for the Solo 401k?

In 2015, the updated maximum contribution limit for the self-directed retirement plan is $18,000 as of salary deferral and for participants below 50 years of age. Plan owners can make an extra $6,000 catch up contribution if they are 50 years old and above. As for profit sharing, the maximum limit is $59,000 including the catch up contribution for qualified participants.

What are the beneficial features of the Owner-Only 401k?

The Small Company Retirement Plan 401k has other attractive features such as Checkbook Control. This allows the plan owner to easily use his retirement savings for qualified investments without custodian consent and fees. Participants also have loan options if they needed the money for various needs.

There are various questions that need to be answered to fully understand and maximize the features of the Small Company Retirement Plan 401k. On top of having a clear understanding how this retirement plan works, you also need to choose a reliable and trusted plan provider.

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