The ultimate retirement plan
Self-directed Solo 401k is the ultimate retirement plan for those who work for themselves and have no full-time employees other than their spouse. Any business structure will qualify: sole proprietorship, partnership, LLC, corporation, etc.
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Do I qualify?
The Economic Growth and Tax Relief Reconciliation Act (EGTRRA), passed in 2001, stipulates how the self-employed or sole business owner can use a 401k. In particular, the act clarifies that a single qualifying participant can make contributions in the role of employee and employer. This can lead to very high contribution limits.
You may qualify for the Solo 401k if you meet two eligibility requirements:
- The presence of self-employment activity
- The absence of full-time employees
Understanding the Solo 401k
With a self-directed Solo 401k plan from Sense Financial, you can make high contributions, borrow up to $50,000, have checkbook control over your retirement funds and use them to invest in real estate, notes, start-up businesses and much more, tax-free. Our process ensures speed, accuracy and compliance.
Features
Be your own trustee
Every 401k designates a trustee to hold the assets of your retirement plan. In the case of the Solo 401k, you may act as your own trustee, which gives you “checkbook control” over the assets and lets you invest as you see fit.
As the trustee of the plan, you can make investments from your 401k trust account by simply writing a check. This makes the Solo 401k ideal for real estate and other nontraditional investments. However, as a trustee, you are prohibited from benefiting directly from the trust. You may not combine personal money with the trust or do any prohibited transactions with the trust.
Flexible options
If you are self-employed, the Solo 401k plan allows you to choose the investment option best for you, with no custodian consent required. Note that you are restricted from prohibited transactions as defined by the IRS.
Like the Checkbook IRA, the Solo 401k plan expands your investment options. The Solo 401k, however, has the advantage of not requiring an LLC or a custodian. In addition, the Solo 401k plan offers a high annual contribution limit (nearly 10X higher than a Traditional IRA), allows you to borrow up to $50,000 for any purpose, and imposes no custodial fees.
Real estate investments
The Solo 401k allows you to invest in tax-deferred real estate investments. Income from your investments will flow back into your retirement plan, and you won’t be taxed on it until you take a distribution.
Real estate investments with the Solo 401k are also exempt from Unrelated Debt Financed Income (UDFI) tax. Using a traditional IRA with non-recourse debt to finance a real estate purchase will trigger the UDFI tax, a penalty that could subject you to a 37 percent tax. A Solo 401k that uses non-recourse financing for a real estate investment is exempt from the UDFI tax according to IRS Section 514(c)(9).
Participant loan
Every Solo 401k plan we establish includes a participant loan feature that allows you to borrow up to $50,000 from the plan for any purpose, including financing your business or paying personal bills, tax-free and penalty-free. This loan can be taken any time prior to your qualified retirement age.
What’s included
Our Solo 401k establishment service includes
- Adoption agreement
- Basic plan document
- Post-PPA amendment
- Summary plan description
- Trust agreement
- Appointment of trustee
- Action by board of directors
- Beneficiary designation
- Loan procedure
- Loan documentation
- Transfer request forms for incoming funds transfers
- IRS registered tax ID (EIN) with tax exempt status
- IRS opinion letter
- Plan serial number
Our annual Solo 401k compliance service includes
- Unlimited client support
- Assistance with filing of tax forms 5500-EZ and 1099-R
- Maintenance of plan documents to ensure IRS compliance
- Assistance with rollover/transfer
- Dedicated account manager
- Interim plan amendments as required by the IRS
- Turnkey process for Solo 401k bank account
- Calculation of annual contribution amounts
- GUST, EGTRRA & PPA documents
- State-of-the-art client portal
What our clients are saying
I started a Solo 401K plan with Dmitriy’s Sense Financial in 2015. It has been a great experience since then and the Solo 401k plan has been a wonderful tool.
Tony S. – Skillman, NJ
In my opinion, anyone that owns their own business should have a Solo 401K, and I would highly recommend Sense Financial – you will not be disappointed!
Ben D. – Spokane, WA
Dmitriy and his staff have been incredibly kind, helpful, and responsive while I have been going through the process of setting up my Solo 401k plan.
Sandra H. – Chicago, IL
Alternate investment options with your self-directed account
Investments that make sense
It’s your money. It’s your future. Invest your way.
Schedule a complimentary consultationOur expert team is always ready to answer your questions. Call us at (949) 272-8785 or email contact@sensefinancial.com