Are YOU eligible to set up a Solo 401(k) plan? Want to find out? Join IRA Financial’s Adam Bergman as he lets you in on one of the best kept secrets in retirement accounts.

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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.

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Who is eligible to set up a Solo 401k plan?

retirement planning is an essential aspect of financial stability. While many individuals rely on employer-sponsored retirement plans, such as 401ks, for their retirement savings, self-employed individuals or business owners without any employees have the option of setting up a Solo 401k plan. This type of plan offers significant advantages, including higher contribution limits and the ability to gain more control over investment decisions.

So, who is eligible to set up a Solo 401k plan?

Self-employed individuals

Solo 401k plans are primarily designed for self-employed individuals or those who run their own business without any employees, except for a spouse. This includes individuals who work as sole proprietors, independent contractors, freelancers, or consultants. If you can demonstrate some form of self-employment income, you are eligible to establish a Solo 401k plan.

Ownership of a small business

If you own a small business, you may also be eligible to set up a Solo 401k plan, even if you have a few part-time employees. To qualify, these employees should work fewer than 1,000 hours per year. Therefore, small business owners with limited staff can still take advantage of a Solo 401k plan and enjoy the generous contribution limits associated with it.

Spousal employees

One of the unique features of a Solo 401k plan is its allowance for spousal employees. If your spouse works with you in your business, they can also participate in the Solo 401k plan. This can be a valuable opportunity for a couple to maximize their retirement savings together, as both spouses can contribute to the plan, potentially doubling the yearly contributions.

How to set up a Solo 401k plan?

Setting up a Solo 401k plan is relatively straightforward compared to other retirement plans. The first step involves establishing a business entity, such as a sole proprietorship, partnership, or corporation. Once your business structure is in place, you can proceed with opening a Solo 401k account with a financial institution or a Solo 401k provider.

Usually, the account setup process involves completing the necessary paperwork, providing your business and personal information, and designating yourself as the plan administrator. The financial institution or provider will guide you through the process and help you choose the investment options that suit your goals and risk tolerance.

It’s worth noting that while setting up a Solo 401k plan is relatively simple, there are specific eligibility criteria, contribution limits, and compliance requirements that need to be understood and followed. Seeking professional guidance or consulting with a tax advisor is highly recommended to ensure you meet all legal obligations and maximize your retirement savings.

In conclusion, self-employed individuals, small business owners, and individuals with spousal employees can all be eligible to set up a Solo 401k plan. This retirement savings option offers greater flexibility, higher contribution limits, and increased control over investment decisions. If you fall into one of these categories, exploring the benefits of a Solo 401k plan can be a wise financial move for securing your future.