If you’re self-employed and searching for your retirement planning options, you’ve likely stumbled across the Solo 401k plan. This plan is a unique retirement option in that it can only be used by single-member businesses. The Solo 401k offers incredible incentives for self-employed individuals and is one of the best retirement planning options available.
But once you’ve decided that a Solo 401k sounds like the right plan for your business, how do you know which provider to go with?
In this article, we will break down the main perks of a Solo 401k and how you can find an honest provider who will help you reach your retirement goals.
How Can a Solo 401k Help My Small Business?
Amongst the many benefits of choosing a Solo 401k, the following three are perhaps the most compelling:
- Employee and Employer Contributions.
If you’re like many people, you chose the self-employed lifestyle in order to escape demanding bosses and toxic work environments. As a result of choosing a path of self-employment, you became your own boss and your own employee.
Because you fill two roles within your company, you can contribute to your Solo 401k retirement plan as if you are two people. Between contributions as an employee and contributions as an employer, you can invest a total of $57,000 each year to your plan.
- Two Tax Options.
Discussions of taxes can often lead to heated arguments. There are many ways to structure retirement plans in order to best navigate the current tax climate. With a Solo 401k, you have the option to make Roth (after-tax) contributions or Traditional (pre-tax) contributions.
The choice is up to you as to which tax structure makes the most sense for your business and your retirements plans.
- Loans When You Need Them.
If necessary, you can take out loans of $50,000 from your Solo 401k plan. While this is not something you should do regularly, the option is available if you run into a difficult financial situation.
Solo 401k Providers
There are a number of considerations that must be made before selecting a Solo 401k provider:
- Associated Costs of Plan
Some providers will impose fees on your Solo 401k plan. If possible, you’ll want to search for a provider who does not have any extra costs or fees for their service.
- Difficulty of Set-up and Plan Maintenance
Your time is valuable. If it takes a lot of effort to set up and maintain your plan with a certain provider, you should look elsewhere. The process should be intuitive, easy, and quick.
- Customer Service
Hopefully you never run into any trouble with your plan. But if you do, you need to know that your provider has your back. Ensure that your plan provider offers excellent customer service and is available by phone, email, and chat.
Are You Ready to Create Your Solo 401k Plan?
If you’re self-employed, a Solo 401k plan is one of the best ways you can secure your financial situation in the future. Call a good Solo 401k plan provider today!
