With more than two decades of operational and management experience Lawrence Groves has developed a sharp eye for how businesses get clobbered with retirement plan fees and how they can retool for a sleeker, smoother, strategically focused retirement plan. As an entrepreneur who quickly built his own successful consulting business he also empathetically helps other business owners set priorities and create the retirement programs that get results What is a Solo 401k Plan?
Solo 401K plans are retirement plans that provide for discretionary employee and employer contributions. These Plans were created in 2001 by the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). The act allowed for changes to the laws governing traditional 401K plans. The changes allowed small businesses to enjoy the advantages of 401K plans without the costs that accompany regular 401K plans. Some estimate that 19 million people may be able to take advantage of these plans.
What is a Solo 401k Plan?
Solo 401K plans are retirement plans that provide for discretionary employee and employer contributions. These Plans were created in 2001 by the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). The act allowed for changes to the laws governing traditional 401K plans. The changes allowed small businesses to enjoy the advantages of 401K plans without the costs that accompany regular 401K plans. Some estimate that 19 million people may be able to take advantage of these plans.
Who can have a Solo 401k Plan?
You can if you are a self employed with no common law employees. Eligible self employeds include sole proprietors, partnerships, S-Corps, C-Corps, LLC’s and small family businesses. You can also have a Solo 401k plan if you have a part-time job in addition to your fulltime position. You can not have any fulltime regular employee other than spouse and in certain cases, your children. However, if your plan is set up properly you can have part-time or occasional employees as long as they do not work more than 1000 hours in a twelve month period.
Why have a Solo 401k Plan?
A Solo 401k plan provides many features including:
1. You can tax defer 100% of your compensation up to $15,500 a year as employee contribution
2. You can deduct 25% of your compensation (net income) up to $45,000 as an employer contribution.
3. You can deduct an additional $5,000 above the $45,000 limit if you are age 50 or older.
4. You can have a tax free retirement from making Roth 401k contributions.
5. Your Solo 401k account is protected from creditors in bankruptcy.
6. Your Solo 401k plan can consolidate your traditional IRA, 403(b), or corporate 401k rollovers. However, It can not hold a Roth IRA.
7. You can borrow 50% of your total Solo 401k account balance up to $50,000.
Where can Investment be made?
Solo 401k plans have a huge variety of investment options. Investments can include:
A. Stocks, Bonds, Mutual Funds
B. Real Estate
C. Private Placements
D. Other Corporations like LLC’s
E. Oil & Gas Royalty Interests
F. Stock Options
G. Mortgages & investment loans
H. Gold & Silver coins
I. Life Insurance & Annuities
When does a plan need to be setup?
A Solo 401k Plan should be started early in the year to use your earnings as a basis for your contributions. However, you can start a plan as late as December 31 and still benefit on your taxes.
The reasons to have a Solo 401k Plan
..Because you do not know how much time you have left in your working life
...Because you do not know how much time you have left to live
...Because you do not know if you can quit working
..Because you do not know when you’ll have enough money for a comfortable retirement
Where to get the best self directed Solo 401k Plan
Go to The Solo-k Retirement Group at http://www.solo-k.com for the best value and assistance.