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Solo 401k Plans: The Mother Lode of Tax Deductions

What is a Solo 401k Plan?

Solo 401k plans are retirement plans that provide for discretionary employee and employer contributions. These Plans evolved in 2001 from the Economic Growth and Tax Relief Reconciliation Act (EGTRRA).The act allowed for changes to the laws governing traditional 401k plans.

The changes gave small businesses the opportunity to enjoy the advantages of making income deferrals to 401k plans in addition to employer contributions without exceeding the tax deductible limits that previously accompanied 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 full-time position. You cannot have any full-time regular employees other than a 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 Should you have a Solo 401k Plan?

A Solo 401k plan provides multiple opportunities including:

1. You can defer taxes on up to $17,500 a year as employee contributions

2. You can deduct up to 25% of your compensation (net income) up to $52,000 as an employer contribution.

3. You can deduct an additional $5,500 above the $52,000 limit if you are age 50 or older.

4. You can have a tax free retirement with Roth Solo 401k contributions.

5. Your Solo 401k account is protected from creditors in bankruptcy.

6. You can consolidate your traditional IRA, 403(b), or corporate 401k as rollovers into the Solo 401k. However, Roth IRAs cannot be transferred to the Solo 401k.

7. You can borrow up to 50% of your total Solo 401k account balance up to $50,000.

Where can you Invest

Solo 401k plans have multiple investment options. Some of the investments opportunities 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. You just can’t wait until the day before you file your taxes. When you are ready go to Solo 401k to get started. If you want to do further research go to: IRS Reference on Solo 401k Plans and Wikipedia Reference on Solo 401k Plans.

The reasons to start a Solo 401k Plan

..Because you want to self direct the plan’s operations.

… Because you want Checkbook Control over your Investments.

… Because you want to self trustee your asset decisions.

..Because you do want to self custody your assets.

Where to get the best self directed checkbook control Solo 401k Plan

Go to the Solo-k Retirement Group:- the Solo 401k Authority

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