The Solo 401 k self-employed retirement account is a lucrative investment for qualified individuals. Independent contractors are eligible for this particular account. The professional world is fast evolving with jobs no longer tied to the conventional workplace and setup. Independent contractors such as real estate agents and brokers are under this category. The Solo k retirement account allows independent contractors to earn more through using the 401 k retirement funds.
Solo 401 k Self-Employed Retirement Account Qualifications
Before establishing the account, applicants must first comply with the Solo 401 k important eligibility requirements. First, you must be a self-employed individual. According to the IRS, self-employed individuals are those that work as freelancers, consultants, and independent contractors. You can still have a fulltime job as long as you can prove your self-employment activity. The Solo 401 k self-employed retirement account is also ideal for small business owners that have no fulltime employees. The business owner and the spouse are the only ones that can work full time in the company.
Why invest on the Qualified 401 k Plan?
One of the main reasons why participants commend the Solo 401 k self-employed retirement account is that it offers low cost administration. The account owner is the trustee of his own retirement plan. This eliminates the need for custodian consent and fee when investing your retirement funds. The 401 k Checkbook Control feature allows you to use your retirement money on investments as easy as writing a check.
The Loan Option
Plan participants can borrow from the Self-Directed 401 k. However, it is important to note that not all plan providers allow the loan option. Thus, before establishing the Solo 401 k self-employed retirement account, choose the right plan provider first. Choose the plan administrator that allows you to borrow up to 50% of the total plan value or $50,000. Qualified plan participants that loan from their account repay the Prime Rate + 1%. Repayment is done at least quarterly in a span of 5 years. The borrowed amount from the Solo 401 k self-employed retirement account can be used on your discretion. Participants may use the amount to pay utility bills, tuition fees, and even start up a new business.
There are overflowing perks from the Solo 401 k self-employed retirement account. It is the retirement plan that offers financial growth and wealth-building. The most important thing to remember is to choose the right plan provider.
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