Use our new AI tool to find the right Self-Directed IRA!

IRA Financial Blog

Start a Solo 401(k) in 2023

solo 401k in 2020

2022 is coming to a close, speeding up and slowing down at the same time. It happens every year at this time – as the calendar comes to a close the weeks feel longer but fitting everything into the schedule makes time feel like it’s flying.

As preparations are made for the end of this year, it’s important to make certain your retirement strategy for 2023 is in top shape. This means it’s a great time to review what your money did in 2022 and plan for its future. So, if you’re an entrepreneur, own your own business, and want to start saving more money in the new year, look into starting a Solo 401(k).

Is the Solo 401k for You?

A Solo 401(k) was created specifically for small-business owners and other self-employed individuals. It is a qualified retirement plan for Americans, and it allows contributions as both the employee and the employer, meaning you can amass more wealth more quickly in your account. It was designed for employers with no full-time employees other than the business owner and their spouse. Self-employed workers can receive the same tax benefits as with a general 401(k) plan, without the rules those plans are subject to. A Solo 401(k) plan can be enacted by any self-employed business, including sole proprietorship, limited liability company, partnership, C-corporation and S-corporation.

Amplified in 2001 as part of Congress’ Economic Growth and Tax Relief Reconciliation Act (EGTRRA), tax law was amended to allow self-employed individuals to have access to a 401(k) -like retirement platform, commonly called the Solo 401k or Self-Directed 401(k). Individuals must claim some self-employed income, but do not need to be reliant only on that income. The individual does not need to work in a self-employed capacity full time or earn a full-time income from their consulting.

More Investment Options, Greater Control

The Self-Directed 401(k) allows investments to be made in real estate, precious metals, cryptocurrencies, private loans, and private business investments. For a self-employed individual and their spouse, the Solo 401(k) allows for a greater number of options in terms of investing, and a greater level of control. Directing investments into businesses of choice and supporting company or personal goals can become a standard within the business from its inception.

For the individual launching a business in 2022, it is important to make sure all the paperwork is correct and filed properly. And it’s worth looking into setting up a retirement plan so that it is ready to be a success from the beginning of the business. The Solo 401(k) plan is an exciting option for individuals setting out on the path of business ownership and entrepreneurship. Saving for retirement from the beginning of the business can help make it feel more real and established.

Related: Solo 401(k) Investments

Bet on Yourself and Reap the Benefits

For the alpaca farmer, writer, accountant working on the side, pastry chef doing a catering business on their own – everyone can benefit from having a Solo 401(k) set up for them and their business. It lets a business owner bet on themselves and reap the benefits of that. Individuals can save more, as they contribute as both the employer and employee. They have emergency access to their own money. And contributions can be directed towards the investment of choice.

Self-employed individuals looking to start a Solo 401(k) should contact a qualified advisor who specifically handles these types of accounts. Look for experience in the field as well as accessibility should you need additional advice or support. The set-up process can be painless, and the right company will help establish it quickly and easily.


Latest Content

Send Us a Message!