The 401k Retirement Plan for Qualified Self Employed – What Real Estate Professionals Need to Know

The 401k Retirement Plan for Qualified Self Employed

The 401k Retirement Plan for Qualified Self Employed

The 401k retirement plan for qualified self employed is one of the most lucrative and necessary investments today. The retirement account is not just your failsafe option for the future. It is a tool for wealth-building especially for self-employed individuals. Real estate professionals belong in the self-employment category and can be eligible for the Solo 401k retirement plan.

The 401k Retirement Plan for Qualified Self Employed Fundamentals

Real estate professionals have lots to benefit from the Single-participant 401 k. It is essential to know the basics of the retirement plan in order to comply with the rules and avoid the prohibited transactions.

Here are the fundamentals of the 401k retirement plan for qualified self employed and small businesses:

  • Maximum Contribution Limit – The annual maximum contribution as for salary deferral is $18,000 for plan owners below 50 years of age. Participants aged 50 and above are allowed a catch up contribution of $6,000 as of 2015. For the profit sharing component, the updated allowed maximum contribution is $59,000 for plan holders 50 years and older. Election of the type of contribution you prefer to make is the 31st of December of the present year while the actual contribution is before or by the tax-filing deadline.
  • Loan Option – Participants are allowed to borrow from their retirement plan. This is according to IRC Section 72(p). The plan owner could borrow up to $50,000 or 50% of the total value of their account whichever is less. Repayment is flexible in a span of five years or less and with the lowest interest rate or Prime Rate +1%.
  • Roth Sub Account – One of the most attractive features of the Solo k retirement plan is that it offers tax-free Roth contribution. This feature is if you contribute or rollover to the Roth 401k sub account. Participants will make after tax contribution in order to enjoy the benefits of transacting without any tax restrictions.
  • Checkbook Control – With the Individual k retirement plan, the plan owner is the trustee of his own account. This means you can access and use your retirement money for qualified investments as conveniently and fast as writing a check. You can also skip the paperwork and no more additional fees and charges for the custodian as well.

The 401k retirement plan for qualified self employed is indeed the answer to the ever growing financial needs of today’s real estate professionals. Find a trusted 401k plan provider to unravel countless possibilities with your retirement plan.

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