Solo 401k

The Solo 401k is a retirement plan for self employed individuals or business owners with no W-2 employees other than a spouse. Sole proprietorships, independent contractors, partnerships and corporations (subchapter S and C corporations) would qualify for a Solo 401k.

The deadline for establishing a Solo 401k is December 31st of the year in which you would like to receive the tax deduction or your fiscal year end.

What are some of the benefits of a Solo 401k?

• Solo 401k Contribution Limits - In 2009 contributions of up to a maximum of $49,000 or up to $54,500 if age 50+ can be made into a Solo 401k.
  
  
• Flexible Annual Contributions  - Solo 401k plan contributions can be increased or decreased or stopped on a year by year basis.
  
  
• Solo 401k Loans - Tax free loans are permitted with a Solo 401k plan. Loans up to 1/2 of the total value of the Solo 401k up to a maximum of $50,000 are permitted. IRS rules do no allow loans with IRAs, SEP IRAs, or Keogh (Money Purchase/Profit Sharing Plans).
  
  
• Tax Deferred Growth  -  Contributions and investment earnings grow tax deferred.  After age 59 1/2 withdrawals can be withdrawn without penalty. Federal and state taxes if applicable will apply.
  
  
• Solo Roth 401k  - There is an option to make Roth 401k contributions with the salary deferral portion of the Solo 401k.  Contributions into a Solo Roth 401k  are not tax deductible, but withdrawals are tax free after age 59 ½.

Solo 401k Advantages

There are 2 primary advantages of the solo 401k versus other self employed retirement plans.

1. Potentially greater retirement contributions at the same income level, therefore maximizing retirement contributions and valuable tax deductions.
   
   
2. The option of a tax free loan using the solo 401k's balance as collateral for the loan.

Learn more about the advantages of the Solo 401k.

   Need Help or Advice?  |  Open a Solo 401k

Disclosures:

*  The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

* Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.