In today’s uncertain economic times, many people, particularly those who are interested in investing in Real Estate or starting a business of their own are choosing a Solo 401k over traditional retirement savings. A Solo 401k offers a self-employed business owner the ability to use his or her retirement funds to make virtually any type of investment on their own without requiring the consent of a custodian.
One of the biggest advantages to a Solo 401k is the high annual contribution limit (up to $55,500), allows you to borrow up to $50,000 for any purpose, and imposes no custodian fees. This offers you flexibility to buy inventory, pay bills, seek out professional services needed to get started in your business or even purchase Real Estate. The flexible program gives YOU the control without having to get the approval of a custodian or having to pay any custodial fees.
With your Solo 401k, you get similar advantages as a Self Directed, without the custodial drawbacks or need for an LLC. With it, you may may be a business owner already established in business or one that is planning to be, and your business will not have or plan to have any full-time employees. Another advantage is that the plan owner’s spouse may also contribute as long and he or she is an employee of the business.
Once you meet the eligibility requirements and roll your funds, you have the option to borrow up to 50% of the total value or $50,000, whichever is less, without tax penalty. This makes it a perfect tool for independent contractors, consultants and others that own home businesses. Once the loan is initiated, the payment schedule is established and is paid back into the account, including interest, over a term of up to 5 years. The best part is that this plan offers “Checkbook Control”, so you have the ability to simply write out a check as you need investment funds. In essence, you have easy access to the money you need to invest now, all while paying back your retirement, including the extra interest for the future… building your portfolio in 2 ways and staying in control!
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