Learn more about the Solo 401(k) –
—
The Solo 401(k) plan is the best retirement plan option for the self-employed. Are you eligible to open one up? There are two important requirements – the presence of self-employed activity and the absence of full-time employees.
—
Discover more videos by IRA Financial:

Subscribe to our channel:
—
About IRA Financial:

IRA Financial Group was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(K) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.

Learn More: …(read more)

LEARN MORE ABOUT: Qualified Retirement Plans

REVEALED: How To Invest During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

Am I Eligible to Set Up a Solo 401(k) Plan?

If you are a self-employed individual or a small business owner with no employees (excluding your spouse), you may be eligible to set up a Solo 401(k) plan. This retirement savings vehicle offers many advantages and has become increasingly popular among self-employed individuals and freelancers.

Solo 401(k) plans, also known as individual 401(k) or one-participant 401(k) plans, are designed to benefit self-employed individuals, sole proprietors, partnerships, and small businesses. The beauty of a Solo 401(k) plan lies in its higher contribution limits and the ability to save more for retirement compared to other retirement accounts.

To be eligible for a Solo 401(k) plan, you must meet some specific criteria. Firstly, you must have some form of self-employment income. This can be derived from activities such as consulting, freelancing, or running a small business. Traditional employees who receive a W-2 form but also have self-employment income on the side can also set up a Solo 401(k) plan, as long as their self-employment income is substantial enough.

Another eligibility requirement is that your business must not have any full-time employees, with the exception of your spouse. However, part-time or seasonal employees who work less than 1,000 hours per year can be excluded from the eligibility calculations. This makes the Solo 401(k) plan ideal for self-employed individuals who don’t have any employees or whose businesses operate on a very small scale.

Setting up a Solo 401(k) plan comes with several benefits. Firstly, it provides the ability to make both employer and employee contributions to the plan. As an employee, you can contribute up to the maximum limit set by the IRS each year, which is $19,500 in 2021 (or $26,000 if you are aged 50 or older, taking advantage of the catch-up contribution). Additionally, you can contribute up to 25% of your net self-employment income as an employer. This dual contribution feature allows you to save a significant amount of money toward your retirement.

Moreover, Solo 401(k) plans offer generous contribution limits compared to other retirement accounts like Traditional or Roth IRAs. For instance, in 2021, the total contribution limit for a Solo 401(k) plan is $58,000 (or $64,500 if aged 50 or older), while an IRA’s contribution limit is $6,000 (or $7,000 if aged 50 or older). This higher limit enables individuals to save more aggressively for their retirement years.

In addition to higher contribution limits, Solo 401(k) plans also provide the flexibility to invest in a range of assets such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), real estate, and more. This allows you to diversify your investments and potentially maximize your returns.

Setting up a Solo 401(k) plan is relatively easy and can be done through financial institutions, investment companies, or qualified Solo 401(k) plan providers. It is essential to choose a provider that offers robust features, low fees, and excellent customer service.

In conclusion, if you are self-employed with no employees or have a small business with only your spouse working for you, a Solo 401(k) plan can be an attractive retirement savings option. With higher contribution limits, the ability to make both employer and employee contributions, and the flexibility to invest in a wide range of assets, a Solo 401(k) plan provides self-employed individuals with a powerful tool to save significantly for their retirement years. Ensure you meet the eligibility requirements and choose a reputable provider to get started on the path to a comfortable retirement.