Solo 401k Roth Account – Tax-Free Wealth-Building Options

Solo 401k Roth Account

Solo 401k Roth Account

The Solo 401k Roth account is a viable way for wealth building using your retirement money. There are a lot of qualified retirement plans but only a few could provide flexible investment opportunities. The combination of the Individual 401k plan and Roth account maximizes your plan benefits a notch higher. The small business 401 k with the Roth sub account is ideal for plan owners who want to experience income and revenue growth without tax restrictions. Using your retirement fund for investment and gaining money from that investment is made tax-free with the Roth 401k sub account.

Basics of the Individual 401k Roth Account 

The Roth 401k account offers a powerful and lucrative tax-free solution for the Individual k retirement savings. Accounts with the Roth feature are basically funded using after-tax contributions. Since the participant opted for an after-tax contribution, he benefits from it through tax-free investment, growth and withdrawals. It is important to note that the Roth sub account does not provide tax exemptions upfront. However, it guarantees viable tax solutions on a long-term basis.

Privileges for the Solo 401k Roth Account Owners

There are numerous advantages for participants who incorporate a Roth sub account to the Single-Participant 401k. Here are the upsides of establishing this pension plan for wealth-building purposes:

  • Checkbook Control – Plan owners are the trustees of their own retirement plan. Participants have easy and fast access to the Solo 401 k funds and could control their account without any custodian consent. Funding your investment using the Individual k savings is as easy as issuing and writing a check.
  • Loan Feature – The Solo k retirement account with Roth sub account also offers a loan option. Borrowers are allowed to loan up to $50,000 from their retirement savings or 50% of the total account value, whichever is less. Repayment is within 5 years with interest rate of prime rate plus 1%.
  • Flexible Investment – Account holders could use the Self-Directed k pension plan funds on investments such as real estate, mortgage notes, tax liens, tax deeds and precious metals among others.

The Solo 401k Roth account could also be used to purchase debt-financed properties. In the case of a Roth 401k retirement plan, purchase of such property is not entitled to UBTI tax. In ordinary IRA plans, this may incur an estimate of 35% UBTI tax. Moreover, the Individual k Roth account also allows tax-free income and withdrawal.

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