“Income tax returns are the most imaginative fiction being written today.”
~ Herman Wouk
Whether income tax returns are imaginative or not, one thing is for sure: everyone has to pay tax. For individuals who work hard to save money for their retirement, taxes could could lower the earnings significantly. One has to pay taxes mandatorily but the amount of the tax bill that you have to pay is in your control. With careful planning, it is possible to save money on taxes and grow your retirement savings. If you are a small business owner or self-employed professional, Roth Solo 401k for consultant is the perfect solution for you.
The effective tax rates will be likely to increase in the future and it is crucial to find a way to let your money grow tax-free. Roth Solo 401k is a retirement plan that allows tax-free growth of your investments. You do not have to pay any taxes upon withdrawal. This plan allows you to invest after-tax dollars with certain contribution limits so that you can enjoy tax-free growth for several years.
3 Reasons to Choose Roth Solo 401k for Consultant
Tax-Free Investment Growth
The biggest advantage of Solo 401k retirement plan is its tax-free qualified distribution feature, although there are some terms that one must fulfill. Any income and capital gains under a Roth Solo 401k are tax-free. One could create an extraordinary retirement fund even with decent investment returns because of the tax-free growth feature of this retirement plan.
Higher Contribution Limits
Roth IRA plans have annual contribution limits of $5,500 ($6,500 for above 50 years) for 2014 and 2015. A Roth Solo 401k plan allows higher contributions of up to $18,000 in 2015 along with catch-up contributions of $6,000 for professionals above 50 years of age.
It can help small business owners and self-employed individuals to maximize tax-free retirement savings along with freedom to invest in different options. You can invest in real estate, tax liens, precious metals, stocks/bonds, and similar investment options. Roth Solo 401k is one of the biggest legal tax shelters available to small business owners and self-employed individuals.
Small business owners often require financial assistance and Roth Solo 401k offers borrowing from the retirement account. You can borrow up to $50,000 or 50% of your overall fund balance. The best part of this participant loan is that you can use it as per your requirements without answering to any authority whatsoever. It is mandatory to repay the entire loan amount within five years of borrowing the loan with at least one installment per quarter.
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