A 401(k) is a profit sharing plan possibility for a business of any size, including a one-person business.
401(k)s are funded by a combination of employer and employee contributions, meaning tax benefits for both.
Your plan from New Direction IRA, the plan investments can be anything the law allows: real estate, gold, private equity, and more.
You choose whether your Solo 401(k) includes a Roth contribution provision, a loan provision, etc.
Annual 401(k) contribution limits are higher than for Individual accounts. Plan earnings are unlimited and tax deferred.
Name yourself as the trustee for your plan and have automatic “checkbook control”.
What is a Solo 401(k)?
For More Self-Directed Investment Information, Click Below
The Basics Of a Solo 401(k)
An Solo 401(k) plan is simply a 401(k) plan for companies with no employees. Solo 401(k) plans have the same options available to them as larger 401(k) plans. However, with a Solo 401(k), the employer, trustee, and participant are often the same person. For self-employed persons or companies with no qualifying employees, a Solo 401(k) plan allows the employer/participant high annual contribution limits as well as a high degree of flexibility and convenience when it comes to acquiring assets.
What Are the Benefits of a Solo 401(k)?
- A 401(k) plan provides employers flexibility and customization depending on the needs of the company and its employees.
- A 401(k) plan provides higher contribution limits than individual accounts like a Traditional IRA.
- Tax benefits for the 401(k) participant and employer.
- 401(k)s can be used to invest in real estate, precious metals, private equity, publicly traded securities and more.
- You can make contributions even if you are over 70.5 (must be employed).
- It can be a part of a generational wealth plan.
Solo 401(k) Eligibility and Other Rules
- To be eligible for a Solo 401(k), you must be at or older than the age required by the employer, even if you are a full-time employee and receive other benefits.
- Each employer is able to customize the 401(k) plan, so eligibility rules will change from company to company.
- The Solo 401(k) is available for any sole proprietorship, partnership, limited liability corporation (LLC), or incorporated business, including sub-chapter "S" Corporation.
- The Solo 401(k) is used by owner-only and small businesses with no employees or if the employees fall outside of certain guidelines.
Rolling Over Your 401(k) – Keep the Tax Benefits and Invest in Alternative Assets
If you have retirement savings in a 401(k) plan that does not allow alternative assets you can rollover those funds to a self-directed IRA that does allow alternative assets (without a tax event and without penalty), as long as you are no longer employed by the company that sponsored the 401(k) or rollover a portion if that plan allows for "in-service" distributions . You get to keep the tax benefits, and you free that money up to invest in all the asset types that New Direction services. Your 403(b), 457(b), defined benefit plan, money purchase plan, or other plan may also be allowed to roll over to an IRA without penalty or taxes. Feel free to call us for more information.