Solo 401k

A Solo 401k is tailor-made for sole proprietors and independent contractors or self employed individuals.

The Solo 401k is the Most Tax Advantageous Plan

The Solo 401k plan possesses most of the characteristics of the Checkbook IRA including having the ability to invest in anything the law allows, but without the need to establish an IRA LLC. It’s the most tax-advantageous, self employed plan available with very high annual contribution limits. You can set up this plan even if you’re employed at a full-time job. And, you can borrow funds from the account.

3 Simple Steps

Is setting up a Solo 401k a complicated process? Yes, but our professionals and consulting attorneys make it easy. It’s just 3 simple steps:

• STEP 1: Solo 401k documents are produced by our attorney and delivered to you.
• STEP 2: You establish a local bank account to receive existing funds or contributions.
• STEP 3: As Trustee, you determine best investment options and execute transactions.

Click HERE to view the Solo 401k structure…

The Trustee

A Trustee must be designated to hold the assets of the retirement plan. In the case of the Solo 401k, you are able to act as your own Trustee and are charged with investing trust assets prudently and productively. Legally barred from benefiting directly from the trust, the Trustee cannot co-mingle personal funds with the trust and cannot enter into a transaction with the trust.

Rollovers

In order to initially fund the Solo 401k you can rollover funds from Traditional IRAs, SEP Plans, previous employer 401k plans, Money Purchase plans, Profit Sharing plans, Keogh plans, Defined Benefit plans, 403(b) plans and Rollover IRAs. This is accomplished by setting up a Trust account for the Solo 401k and directly transferring the funds from the Custodian to the trust bank account.

Contributions

For the salary deferral portion in 2011, you can contribute the regular 401k maximum of $16,500 (with an an additional $5,500 if over the age of 50 at year end). And, you can add up to 25% of compensation for the profit-sharing portion. The combined maximum of these contributions can’t exceed $49,000, plus catch-up additions, if applicable. Also, your plan can be designed with a “designated Roth component”, if you desire it.

Taking Out A Loan

The Solo 401k plan document has a loan provision permitting you to take out a loan. You are able to borrow up to 50% of the total 401k value up to a maximum of $50,000, tax free. Repayment of the loan is according to a loan amortization schedule provided when the loan is initiated and must be paid back into the account (including interest). Failure to make the loan payments may cause a loan default causing taxes and IRS penalties.

For Real Estate Investors

Income to an IRA associated with the financed portion of a property purchased using a non-recourse loan is subject to the Unrelated Debt Financed Income (UDFI) tax. UDFI is a type of unrelated business taxable income. Solo 401k plans are exempt from this tax.

Learn More About Solo 401k Plans:

• Solo 401k Educational Video
• What is a Solo 401k?
• Who is eligible for a Solo 401k?
• How does a Solo 401k work?
• What is the process of setting up a Solo 401k?
• How can you get a Solo 401k Plan?

Your Next Step

For immediate analysis of your situation and the best strategy for your investment interests, call us at 877-229-9763. During business hours, we’re generally able to answer your call immediately.