What is a 401k? Many people think that a 401k is only available to those who work at large companies that offer this sort of option but realistically a 401k is available to those who are even self-employed. A 401k for those who are self-employed is often called a solo 401k. At Accuplan we help business owners get set up with a 401k that has the ability to invest in things other than the stock market, like real estate and gold. This is called a self directed 401k. Let’s dive deeper into some of what a solo 401k and self-directed 401k are so that you can be informed to make the best choices for your retirement.
A self-directed 401k is the same thing as any other 401k. The only difference is that they allow you to invest in non-traditional assets like real estate, gold and private placements, Again, a self-directed 401k is just like any other 401k and you can even have a solo 401k as a self-directed 401k.
A solo 401k as I mentioned earlier allows self-employed business owners the ability to stash money away into a 401k. Who is a qualified individual for a 401k? Those who are self-employed or an independent contractor that only employs themselves or their spouse but there cannot be any other employees.
What other things are there to be aware of with a solo 401k? You can contribute as much as $17,500 as salary deferral to a solo 401k, just like a regular 401k. Also, like a regular 401k where employers match contributions, you can match contributions because you are the employer. The max contribution to your 401k account cannot exceed $52,000 during the year and that includes the employer and employee match. Also, the employer match can only be 25% of the salary the employee made. What you count as your salary differs depending on if your business is an LLC, S-Corp or C-Corp. If you are curious about your specific situation you can contact us for help or contact your tax attorney.
It is time to start stashing money away for your retirement so that you can have that retirement you always dreamed of. A great way to get there is through this self-directed solo k option that I mentioned. If you would like help setting up a self-directed 401k as a solo k contact us for help.
Author: Nick Barker