Solo 401k Benefits

Having the productive management of retirement plans cause nearly everyone to feel overwhelmed. It is considered as an achievement that results to a magnificent lifestyle in the future. Benefits are offered in every retirement plan goes hand in hand with delicate rules and regulations. Before considering a certain retirement plan, you must fully understand all the twists and turns. This article points out the advantages that are intended for self-employed individuals.

Retirement plans such as SIMPLE IRA (Individual Retirement Account), SEP (Simplified Employee Pension) IRA and Solo 401k for self employed are just some of the many plans considered by sole proprietors. Wonderful benefits are offered by a Solo 401k plan which is why it gets the interest of many investors. You could be asking yourself what these benefits are. Each of these would be discussed one at a time. 

First of all let us have background information about Solo 401k plans. This plan is best for individuals who are self-employed (sole proprietors), individual contractors and of course, small businesses. In the name itself, an owner of a business establishment without employees is eligible to take part in a Solo 401k. For self employed individuals, it has similarities with self directed IRA basing on the advantages. The difference here is that Solo 401k plans does not require custodians or even make payments to them. For other plans, these fees range from $20-$50 depending on the custodian's level of performance and experience.

In addition, Solo 401k pans require high contribution limits. The contributions could be as high as $49,000 and individuals over 50 years of age have the option to make catch-up contributions of $5,500. Unlike other plans, they allow the amount of $5,000 as the maximum contribution per month with a catch-up contribution of $5,000 per annum. Account holders are privileged to let their spouses make contributions to this plan. These contributions could be made by the spouse as long as he receives any form of compensation from the establishment. 

Another advantage you could get in a Solo 401k is the broad list of investment opportunities. Mutual funds, bonds and stocks are the usual investment options you could take in other plans. In a Solo 401k on the other hand, additional investment assets namely precious metals and real estate could be taken aside from the mentioned assets. Most retirement plans have the general rule that collectibles and life insurances are restricted investment assets. You are the manager of your account so this means you have total control over your choice of investment.

In addition to that, Solo 401k plans allow account holders to take out loans of up to $50,000 or even up to 50% of your total funds, whichever is lower. The lowest interest rates are applied in this loan which is about 3.25%. The loan taken could be used for personal purposes like payments for debts or funding your business establishment. 

Bear in mind that you are the manager of your Solo 401k. Self employed individuals must be very knowledgeable about the plan since you are the only person to blame in case the account fails. Account custodians who usually process all the transaction done in the account as well as give help in every decision you make. This is not possible though since account custodians are not required in this plan. Acquiring a financial advisor would really be helpful as they could Solo 401k advice as well as review the cash flow of your business. This would you to identify which plan is best for you however, do not end it there. To learn more about this plan; grasp as much information as you can.

Solo 401k

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