Individual 401Ks, otherwise known as Solo 401Ks, are retirement plans is specifically designed for self-employed individuals and small business owners. They’re great if you’re eligible!

We talk through the benefits and advantages of a Solo 401K, including high contribution limits and the ability to invest in a wide range of assets.

We also cover record-keeping, plus why your tax preparer or CPA might not be up on the latest details of the plans. For us, they’re tax plus lots of savings. That means they’re a sweet spot!

We’ve got a special guest, Sean Mullaney, in to talk it through. He’s written a book on the subject, called Solo 401(k): The Solopreneur’s retirement account .

Here’s a link for more info about Sean’s book:

Time Stamps:
00:00 Welcome
01:23 What are Solo 401Ks?
02:44 How much does it cost?
04:15 Investment Options
05:42 Application
08:01 Individual 401K vs SEP
12:28 Where does this apply that’s unusual?

❤❤You can find out more about Sean here!

Twitter: Sean Money and Tax
Blog:
YouTube: @SeanMullaneyVideos
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Other videos to check out:
1. Why We ❤ Bond Ladders:
2. Make 3-4% on safe investments now:

#acpmemberwisdom #financialplanning #solo401k

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Here’s Bridget’s firm website:

John’s firm website:

For advisors around the US:

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Use the following link to view the video transcript:
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LEARN MORE ABOUT: 401k Plans

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When it comes to saving for retirement, most employees rely on company-sponsored 401ks. However, if you’re self-employed, a freelancer, or a small business owner, you may not have access to such plans. Luckily, there’s a powerful alternative that lets you save big for retirement while lowering your tax bill: the individual 401k.

What is an Individual 401k?

An individual 401k, also known as a solo 401k, is a tax-advantaged retirement savings plan designed for self-employed individuals with no employees or those who only employ their spouse. With an individual 401k, you can contribute as both the employer and the employee, which allows you to save more money than with other retirement plans.

How does it work?

An individual 401k works like a traditional 401k, but with higher contribution limits. As the employer, you can contribute up to 25% of your income, and as the employee, you can contribute up to $19,500 per year (or $26,000 if you’re 50 or older). This means that you can potentially save up to $57,000 annually in a solo 401k.

Another advantage of an individual 401k is that you can make contributions until the April tax-filing deadline of the following year. For instance, if you’re filing your taxes for 2021 in April 2022, you can still make contributions to your individual 401k for 2021 until then.

Tax Benefits of an Individual 401k

One of the biggest benefits of an individual 401k is the tax advantage. First of all, your contributions are tax-deductible. This means that any money you put into the plan is subtracted from your taxable income, resulting in a lower tax bill.

Additionally, the money in your individual 401k grows tax-deferred. This means that you don’t have to pay taxes on any investment gains until you withdraw the money in retirement. Depending on your tax bracket, this could result in significant savings over time.

Other Advantages of an Individual 401k

Aside from the tax benefits, an individual 401k offers a few other advantages over other retirement plans.

Firstly, you have more control over your investments. With a company 401k, you’re often limited to a selection of mutual funds chosen by the plan administrator. With an individual 401k, you can choose from a wider range of investments, including individual stocks, bonds, and mutual funds.

Secondly, you can borrow from your individual 401k if you need to. While this isn’t something you should do lightly, it’s nice to have the option if unexpected expenses come up.

Finally, an individual 401k is easy to set up and maintain. You can open an account with a financial institution that offers individual 401ks, such as a brokerage or mutual fund company, and manage the account online or by phone.

In summary, an individual 401k is a powerful retirement savings tool for self-employed individuals and small business owners. By contributing as both the employer and employee, you can save more than with other retirement plans, and the tax benefits can add up to significant savings over time. Plus, you have more control over your investments, can borrow from the plan if needed, and it’s easy to set up and maintain. If you’re self-employed or a small business owner, consider opening an individual 401k to save big for retirement while saving on taxes.