(Nabers Group) 877-SOLO-401K. The owner of the world’s only full service self directed IRA & 401k provider presents the advantages of an Unlimited Solo 401k. This is a retirement account that is legally able to invest in gold, real estate, private companies, mortgages, LLCs, and virtually anything else….(read more)

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When it comes to retirement planning, Solo 401Ks and Self Directed IRAs have a lot in common. Both are tax-advantaged retirement accounts that allow individuals to save for retirement and benefit from tax deferral. However, there are some key differences between the two, particularly when it comes to Part 4 of Solo 401K vs. Self Directed IRA: UBIT Exempt, Participant Loan, and Roth Account.

UBIT Exempt: Unrelated Business Income Tax (UBIT) is a tax imposed on businesses that generate income from activities that are not related to the business’s primary purpose. With a Solo 401K, the UBIT is exempt, meaning that the account holder does not have to pay taxes on the income generated from investments within the account. With a Self Directed IRA, however, the account holder is responsible for paying UBIT on any income generated from investments within the account.

Participant Loan: Solo 401Ks allow account holders to take out a loan from the account, up to a maximum of $50,000 or 50% of the account’s value, whichever is less. Self Directed IRAs do not allow for participant loans.

Roth Account: A Roth account is a type of retirement account that allows for tax-free withdrawals of earnings and contributions after a certain age. Solo 401Ks allow for Roth accounts, while Self Directed IRAs do not.

In conclusion, Solo 401Ks and Self Directed IRAs have some key differences when it comes to Part 4 of Solo 401K vs. Self Directed IRA: UBIT Exempt, Participant Loan, and Roth Account. Solo 401Ks offer the advantage of being exempt from UBIT, allowing participants to take out loans, and offering the option of a Roth account. Self Directed IRAs, on the other hand, are subject to UBIT, do not allow for participant loans, and do not offer Roth accounts.