Solo 401(k)

Perfect for any sole proprietor, consultant, or independent contractor.

What is the Solo 401(k)?

A Solo 401(k) is a traditional 401(k) plan that covers only one employee. In general, to be eligible to establish this plan, one must be self-employed or have a small business with no full-time* employees other than a spouse or other owner(s).

One of the primary reasons this plan is so popular with self-employed is because it includes all the attractive options of a conventional 401(k) qualified retirement plan, but without the costly administrative requirements.

When determining what type of Solo 401(k) plan works best for you, it’s best to look at all the options the plan provides to make sure it satisfies your retirement planning, tax, and investment goals. 

The self-directed Solo 401(k) plan is generally offered by trust companies or facilitators, such as the IRA Financial Group, who are not in the business of providing investment advice or selling investment products.

Next, you’ll find a short overview of what IRA Financial Group’s Self-Directed Solo 401(k) offers. You can also check out our learn more pages for in-depth information.

*A full-time employee is someone who works more than 1000 hours a year.

$899

one-time establishment fee

$199

annual compliance fee

What’s included?

  • Establishment of IRS approved Self-Directed Solo 401(k) Plan
  • Free Solo 401(k) Plan tax consultation with in-house tax professionals
  • IRS Opinion Letter
  • Adoption Agreement
  • Basic Plan Document
  • EGTRRA Amendment
  • Summary Plan Description
  • Trust Agreement
  • Appointment of Trustee
  • Beneficiary Designation
  • Loan Procedure
  • Loan Promissory Note
  • Application for plan trust EIN
  • Assistance with tax-free rollover of funds to Solo 401(k) Plan
  • Assistance with opening plan bank account
  • Free Solo 401(k) Plan tax support
  • Free tax consultation on the UBTI and UDFI rules
  • Free tax consultation of “Disqualified Person” and “Prohibited Transaction” Rules
  • Free tax consultation with in-house CPA on IRS Form 5500-EZ & assistance with completing form
  • Guaranteed IRS audit Protection

What our Solo 401(k) offers

High Contribution Limits

Plan participants under the age of 50 can make a maximum employee deferral contribution of $18,500 ($24,500 if over 50). That amount can be made in pre-tax or after-tax (Roth). 

Checkbook Control

With our checkbook control plan, you can serve as trustee and gain control over your retirement funds. Making investments, such as in real estate, is as easy as writing a check or executing an online wore transfer. 

Tax-Free 50,000 Loan

Participants can borrow up to either $50,000 or 50% of their account value, whichever is less, tax free and without penalty. This loan has to be repaid over an amortization schedule of 5 years or less with payment frequency no greater than quarterly.

Tax-Free Real Estate Investment

Real estate purchased with an IRA is leveraged with mortgage financing and creates Unrelated Debt Financed Income (UDFI), a type of Unrelated Business Taxable Income (UBTI or UBIT). But with a Solo 401(k), you can use leverage without being subject to the tax.

Simple Administration

The Solo 401(k) plan is very easy to administer. There is generally no annual filing requirement unless your plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS. The short information return is Form 5500-EZ

Strong Creditor Protection

Retirement accounts have become many Americans’ most valuable assets. So it’s vital that you have the ability to protect them from creditors, such as people who have won lawsuits against you.

What you can do now

Learn if you qualify

Don’t know which plan you qualify for? Have questions about a transaction? Our tax professionals are here to help and will get back to you ASAP.

Open An Account

We’ll take care of everything. We’ve helped over 12,000 clients open self-directed retirement accounts over the last 10 years. The whole process can be handled by phone, email, fax, or mail. Our expert tax and ERISA retirement professionals are on-site, greatly reducing the set-up time and cost.

Call us at 800-472-0646 to get started; we’ll help you get a self-directed retirement structure started within minutes.

Learn More

We have a ton of resources that will help answer all your questions. We understand the importance of education when it comes to retirement, and we want to make sure you’re confident about every decision you make.

The button below takes you to our learn more pages, but you also have access to our Forbes articles, blog, videos, and podcast.

Terms you may have heard

We know there’s a lot of information out there; these terms will help you sort through the different types of plans.

LLC

LLC stands for Limited Liability Company and has rapidly become one of the most popular business entity types for new and small businesses, largely because it is considered to be simpler and more flexible than a corporation. The LLC business structure combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. 

LLCs, like corporations, are recognized as separate legal entities, meaning its members are protected from company debts, obligations, and liabilities. In the self-directed IRA LLC context, the LLC owner would be the IRA and the manager would be you, the IRA owner.

SEP

A SEP is a retirement savings plan established by employers, including self-employed individuals (independent contractors- sole proprietorships or partnerships) for the benefit of their employees.

Employers may make tax-deductible contributions on behalf of eligible employees – including the business owner – to their SEP IRAs. The maximum SEP IRA contribution amount is 25% (20% if you are self-employed or a single member LLC) of an employee’s compensation. The SEP IRA follows the same distribution rules as a traditional IRA.

SIMPLE

A SIMPLE IRA (Savings Incentive Match Plan for Employees) allows employees and employers to contribute to traditional IRAs set up for employees. It is suited for a start-up retirement savings plan for small employers not currently sponsoring a retirement plan.

Any employer (including self-employed individuals, tax-exempt organizations, and governmental entities) that had no more than a hundred employees with $5,000 or more in compensation during the preceding calendar year can establish a SIMPLE IRA plan. The plan allows eligible employees to contribute part of their pretax compensation to the plan. 

ROTH

A Roth IRA is an individual retirement account that offers tax-free growth and withdrawals in retirement. The rules dictate that as long as you’ve owned your account for 5 years and you’re 59½ or older, you can withdraw your money when you want to and you won’t owe any federal taxes.  With a Roth IRA, there are no required minimum distributions (RMDs) for as long as you live. In addition, contributions to a Roth IRA are not required to stop when you reach 70½, the cut-off age for a traditional IRA.

However, contributions may be limited by how much you earn—your modified adjusted gross income (MAGI) must be less than the annual limit set by the IRS.