Listen to discussion of the differences between a Solo 401k and Self-directed IRA with special guests Amanda Han and Matt MacFarland from Keystone CPA.

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The solo 401k plan, commonly referred to as self-directed Solo 41k is the retirement plan of choice for self-employed individuals or owner-only businesses including for the features highlighted below:

-The highest contribution limits for any defined contribution plan including up to $57,000 (or even $63,500 if you are 50 or older) for 2020 (for 2021: $58k or $64.5 if you are 50 or older).

-The ability to make pre-tax, Roth, and even Mega Backdoor Roth contributions.

-401k participant loans of up to $50,000

-Invest with checkbook control in real estate, cryptocurrencies, notes, private placements, and other types of alternative investments.

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For over 10 years, My Solo 401k Financial is the leading self-directed solo 401k provider having helped over 8,000 clients take control over their retirement funds by focusing on superior knowledge, expertise, and customer service with over 100+ 5-star verified customer reviews on the Better Business Bureau (BBB)….(read more)

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Solo 401(k) vs. Self-Directed IRA: What’s the Difference?

Are you looking for a retirement plan that offers the flexibility to invest in a variety of different assets? If so, you may be considering a Solo 401(k) or a Self-Directed IRA. Both of these retirement accounts offer the ability to invest in a wide range of assets, but they have some key differences that you should understand before making a decision.

Amanda Han and Matt MacFarland, tax experts at Keystone CPA, Inc., explain that a Solo 401(k) is a retirement plan designed for self-employed individuals or small business owners with no employees. It offers the same tax advantages as a traditional 401(k) and allows the owner to contribute up to $19,500 per year, or $26,000 if they are over 50 years old. The Solo 401(k) also offers the ability to borrow up to $50,000 or 50% of the account’s value for certain expenses.

On the other hand, a Self-Directed IRA is an individual retirement account that allows the owner to invest in a variety of assets such as real estate, private placements, and precious metals. It offers the same tax advantages as a traditional IRA and allows the owner to contribute up to $6,000 per year, or $7,000 if they are over 50 years old. Unlike the Solo 401(k), a Self-Directed IRA does not allow the owner to borrow money from the account.

Both Solo 401(k)s and Self-Directed IRAs offer the ability to invest in a wide range of assets, but there are some key differences that you should understand before making a decision. Han and MacFarland recommend that you consider your individual circumstances and the type of investments you are interested in making before deciding which retirement plan is right for you.