Best Retirement Plans for 2022

Retirement Planning Videos

Retirement Plans for 2022

Hey everyone, welcome to another episode of Adam Live. Hope all is well. Today, were going to talk about the best retirement plans for 2022. We will also talk about other options in terms of opening a retirement account. For now, I’m going to discuss Simple IRAs, SEP IRAs, and Solo 401(k)s. If you are interested in starting a retirement plan this year, you want to know the basics and assess your options. So, without further Ado, let’s get started. I’ll start with the probably the most popular one, even though I don’t think it’s the best one the SEP IRA.


The SEP IRA is a pure profit-sharing plan. Most of us have heard of the SEP IRA. Many businesses need to establish a SEP. Individuals with no self-employment income, or no business income cannot set up a SEP IRA. Just like you can’t be retired or live on Social Security or just have passive income plan set up by businesses now.

Before 2001, the SEP IRA was probably the most popular retirement plan for small businesses. It’s essentially a processing plan, 20% of your compensation if you’re a single member, LLC, or Schedule C. So, if you made $40,000 in that Schedule C 20% times $40,000, that would be your maximum you can put away. Contributions are always in pretax.

You can convert SEP IRAs to Roths, but you’d have to pay tax on the conversion. If you are a W2 employee, you can have a C or an S Corp. Or if you have a partnership and get a guaranteed payment, then it would be 25% of the W2 for the maximum contribution in 2022. You can still set up a SEP IRA in 2022.

So even though the calendar is moved on from 2021, you still have time to set up a retirement plan for 2021. It could be a SEP and we’ll see about the Solo 401(k) plan soon and talk about some of the rule changes and when you can set a Solo 401(k) plan up. But in 2022, you can set up a retirement account up until you file your return, including extensions. So, you have some time.

Is a SEP IRA Right for You?

If you make $300,000, 20% of $300,000 grand is the $60,000, which is around the $61,000 max. SEP IRAs are a great plan if all you want to do is just make pretax contribution. Assuming you don’t want a Roth, assuming you don’t need a loan, and that’s your goal just to maximize pretax contributions. But since 2021, if you’re looking to maximize the ability to make contributions and you want some other options as well. Solo 401(k) is an amazing retirement plan that does not rely on self-employed businesses.

What is the Difference Between a SEP and a Solo 401(k)?

A SEP IRA can be setup by any business. It doesn’t have to be a self-employed business. So, if you have a business with 30 employees, you can still have a SEP IRA. But it’s a pure profit-sharing plan and the contributions are pretty much static percentage wise across the board. So, if you have ten employees and you do 15% for you, generally you’re going to do 15% of the comp for all your employees.

Solo 401(k) is generally for a business that does not have any full-time employees, which means over 1000 hours that are non-owners. So, you can have a Solo 401(k) for just you. It could be you and a spouse. The spouse is not deemed an employee under ERISA, you can have other owners, right? So, you can have a partnership where it’s an accounting firm with ten accountants. Let’s say there’s no full-time staff because you do all the work. Maybe just independent contractors in India, like filing some returns and you’re answering the phones, you’re doing all the stuff. You have no one that works more than 1000 hours but the non-owner. Technically, you can have a Solo 401(k) for your business. Okay, so the difference between a SEP IRA and a Solo 401(k) is that any business can set up a SEP IRA but a Solo 401(k) is limited to businesses with no full-time employees of non-owners.

If you have full time employees of non-owners and you want a 401(k) world, you got to move to a regular 401(k) plan. So, since 2001, EGXTRRA was released after 911 Economic Growth Tax Relief Reconciliation Act which added features to the Solo (k), which basically turned it from a SEP into a meatier retirement plan. So, what does EGXTRRA ad? It added employee deferrals, like you get if you work at IRA Financial or Tesla or Apple and the ability in 2022, to contribute $20,500 or $27,000 if you’re over 50. Plus, it gives you that profit sharing contribution option like the SEP IRA.

If you’re over 50 and you want to max out, the SEP IRA it’s going to keep you at that $61,000 where the Solo 401(k) is going to let you go to the $67,500. So, you’re able to put in $6,500 more, which is significant. Do that over a bunch of years. That money adds up. So that’s the first reason the Solo 401(k) is more popular than the SEP you get the employee deferrals. The second is the catch up.

Learn More: Solo 401k Eligibility

Does a SEP IRA Have a Catch Up?

The SEP IRA doesn’t have a catch-up feature.

Does a SEP IRA have a Loan Feature?

SEP IRAs do not have a loan feature. You can’t borrow any money from your SEP IRA.

Does a Solo 401(k) have a Loan Feature?

Solo 401(k)s have a loan feature that can be used for any reason. Current prime interest rate is 3.25%, although it’s probably going to go up. The Fed basically announced inflation is close to 7% chatter about a rate increase in March, so you can expect prime interest rates will go up as well, which means it will get more expensive to do a loan, or more expensive in a sense lost you more interest. But the good news with the loan is the interest goes back to you or your plan. It’s not going to a bank or a credit card company. So that’s another benefit. What else?

If you’re a real estate investor, right? And you want to use leverage, right? Every smart real estate investor wants to use leverage. Other people’s money. Well, in an IRA of 401K, if you use leverage, it must be a non-recourse loan. That’s a loan you do not personally guarantee. Why? Because Total Revenue Code section 49.75 does not let you personally guarantee an obligation of your retirement account. So that’s why the loan has to be non-recourse. Non-recourse means that there’s no personal guarantee. It also means the lender is taking a bit more of risk because the only recourse the lender will have is taken back the underlying asset property. The lender cannot go after you personally. So, you’re generally going to pay a little bit more points. Probably going to have to put down at least 35%-40% in equity. From a lender’s standpoint, that’s generally what is required. But the beauty in a Solo 401(k), you can leverage up that asset and not pay a tax called the unrelated business taxable income tax or UBTI, which can go as high as 37%, which does apply to IRAs.

Learn More: Solo 401k Frequently Asked Questions & Answers

Do SEP IRAs File Taxes?

SEPS are very easy. On an admin side, the custodian IRA Financial Trust or Schwab or Vanguard will be responsible for all administration. Okay. Whereas a Solo 401(k), you, as the trustee plan administrator, if it’s a small business plan, will be responsible for admin. Now, one thing to keep in mind, if your solo 401(k) plan has less than $250,000 in fair market value assets for the prior year, there’s no filing requirements.

Is a Solo 401(k) Better Than a SEP IRA?

A Solo 401(k) is significantly better than a SEP IRA. The only time that a SEP IRA is better than a Solo 401(k) is if you’re under 50, make lots of money, and you’re going to max out contributions. If you hit $61,000 and really do not care about the Roth feature, loan, or leveraging exemptions for UBTI on real estate, then a SEP will work perfect.

Learn More: Can I have a SEP IRA and a Solo 401k at the Same Time?

Do Solo 401(k)s File Taxes?

If your Solo 401(k) has more than $250,000, you need to file what’s called a 5500 E. Now, it’s a very easy form. I’ve done tons of videos and blogs and podcasts on it. We’ll help you do it. If you’re an IRA Financial client, the process is super easy. It takes no more than seven minutes to do, but it’s still a form that needs to be done and file by July 31. Or you can get an extension, file it by mid-October. Otherwise, there’s some significant penalties. So that’s one administrative hurdle that a Sep IRA does not have, but a Solo 401(k) does, but only if you have assets more than $250,000. So just something to keep in mind if you’re choosing between both.

Can I Roll Over my 401(k) to a Self-Directed IRA?

A Self-Directed IRA allows you to invest in almost anything. The most popular investments include Cryptos, real-estate, and precious metals. You can still invest in stocks and bonds as well. If you have money in your 401k and want to invest in real estate, you can do a rollover. However, there are a few rules you need to be aware of. First thing to keep in mind is something called the plan triggering rules. For example, you need to be over the age of 59.5, leave your job, or the employer terminates the plan. So, if you still work at Tesla and you’re under 59 and a half, you may not have access to those funds. Even if you want to buy real estate or buy cryptos and Tesla won’t let you do it, you just may be out of luck, unfortunately.

So, let’s say that you previously worked for a company with a 401k. You can easily move it to an IRA. You can then fund the Self-Directed IRA with your 401(k) established by your former employer. That will always be an option. But if your money is in a 401(k), you have to worry about the triggering plan rules to access your money.

If you are over 50 and a half, you can do a direct rollover as many times as you want. Direct rollovers go to a custodian. The custodian of the plan receives the money through an indirect rollover, and then you got 60 days to put the money back into another retirement plan. This process can only be done every 12 months.

Learn More: Rollover Your IRA Or 401k to a Self-Directed IRA or Solo 401(k)

What is a Solo 401(k) Checkbook?

A Solo 401(k) checkbook allows you to write checks directly from your Self-Directed 401(k) account. IRA Financial is one of the first companies to offer a Solo 401(k) checkbook. I’ve written two books on it. They are 100% self-directed. You control it. You’re the trustee. We don’t give investment advice. We’re not in your business. We take care of the plan. That’s our job. We’re the plan experts. We are the plan sponsor. We’ll give you updated plan docs. We’re here to consult, support you on questions, on contributions, loan investments, per transaction, distributions, contributions, whatever you need. But you make your own investments. You’re the boss.

Learn More: Solo 401k Checkbook

Simple IRA Plan Features

The Simple IRA does not offer as many benefits as a Solo 401(k). If you’re over 50, a Simple IRA is going to let you do $13,550 per year plus a $3,000 catch up. Simple IRAs are pretax and do not offer a Roth feature.

Simple IRAs as not as popular as other retirement plans. We have tens of thousands of clients that IRA Financial. I think less than 5% of our clients have a Simple IRA. Generally, Simple IRA plans have been around forever and are tailored towards businesses owners that have limited or no knowledge of other retirement plans available. Generally, these individuals had an accountant setup their plan for them. While Simple IRAs have benefits, it does not make sense if you’re self-employed. Instead, you’re better off doing a Solo 401(k).

Reasons to Open a Simple IRA

There are two main reasons to open a Simple IRA. The first is that the IRA custodian will do the administrative work, and you do not have to hire an accountant firm, like Pension Investors, for example, one of the best in the country, which I’m associated with to handle all your administration CPA work. CPA services are also tax deductible.

Are Simple IRAs Good for the Self-Employed?

Simple IRAs limit the contributions you can make to your retirement fund. The inability to max out your contributions is one of the strongest limitations of a Simple IRA. While putting $5,000-$6,000 into your retirement fund adds up, other retirement plans offer better features. That’s why Simple IRAs are generally unpopular.

*Remember you can still establish a Simple IRA, Roth IRA, or a Solo 401(k) until you file your taxes. The deadline to file your taxes is April 15th, 2022. You also have the option of opening a tax-free v. tax deferred IRA.

Learn More: Types of Self-Directed IRAs

How Much Do I Need to Start an IRA with IRA Financial?

It is up to you how much you would like to put in your IRA. Before deciding, you should consider your financial situation. However, IRA Financially offers a flat annual fee is $360 a year. There are no transaction fees on asset valuation fees, no check fees, no wire fees. That’s it. That’s all you’re going to pay if you do not want to form a Self-Directed IRA LLC.

These days, we frequently have people setting up Self-Directed IRAs to buy $1,000 in Bitcoin, Ethereum, and other cryptos. Obviously, with real estate, for $1,000, you can’t buy much. But there are other assets like cryptos, gold, private placements, hard money loans where a few thousand dollars, you can get stuff done right, and you can invest in private business startups. I’ve had clients do it with $3,000-$4,000. So, you don’t need a lot to diversify your portfolio.

IRA Fees

That is another good thing about IRA Financial. We don’t have minimums, we have flat fees, we don’t charge commissions. And this is something I want to talk about. A lot of people come to me and say, Adam, I’ve seen these other Crypto IRA companies. They’re not charging an annual fee. That’s pretty good. What’s the deal? And I said, well, look between the lines, because what they’re doing is they’re charging you a flat annual value fee and/or transaction fees. So, they’re saying, well, we’re not going to charge you any custodian fee. But we’ll charge you 1% of your asset value each year, which is generally going to be more than $360 plus. What a lot of these places are doing is they’re charging a spread on the trade. They’re saying, come open a Crypto IRA account with me. Give me the money. No annual fees. Don’t worry. But instead of paying Gemini basis points, you will be paying around 1.5-2% on your purchase. And if you’re buying 100, 200, that’s $2,000-$3,000. That’s more than you will pay in five or six years with IRA Financial. Okay, so that’s where it goes. Trust me. These companies are not giving you free accounts and not making any money. You can’t stay in business that way. It’s not possible. Additionally, these companies also get paid for the trade traffic. So, there are a lot of ways that “Free Crypto IRA” companies get paid. Always make sure to ask about Crypto IRA fees. You may think you’re getting a great deal by not paying annual fees, but you’re not. Nothing is free.

Are Crypto IRAs a Good Idea?

Crypto has been volatile. Nearly all cryptos are down right now. Bitcoins are around $43,000. But I really couldn’t care less where it is in 2022. Where are cryptos going to be in 10, 20, or 30 years from now?

That’s what interests me. I don’t care about this year. And again, that’s why Cryptos are so complementary to a retirement account. If you’re a retirement investor, you should be looking long term. You should not invest your IRA of 401(k) for today. Instead, you’re investing for the future. And that’s why it’s a perfect marriage between cryptos and retirement accounts. Yeah, it’s volatile. It could drop. But over the long term, the horizon is very bright.

IRA Financial works with Gemini for our Crypto IRAs. We love Gemini. Great platform, great people. I think it’s better than Coinbase. Personally, I think their customer service is better, their security is definitely better.

Get Started: Open a Crypto IRA Online

Can I Hold my Own Crypto Keys in an IRA?

The IRS has given little guidance on this issue until a recent case, which talked about personal possession of IRA assets. We are working on a multi signature option for Bitcoin and Ethereum coins because there is some uncertainty now by holding Cryptos personally in a hard wallet at home because of the McNulty case. So, within the next few weeks, we’ll be sending out to all our clients that are taking their cryptos off in exchange to let them know about this new solution where you’ll still be able to control the Crypto on a hard wallet.

Holding the keys on a Crypto exchange is super risky. But again, we got to deal with this, and we have solutions in place. Our team of Crypto developers are hard on it. We’re testing, and we’ll have something in the next week or so for our Crypto loving clients.

If it was up to me, clearly you should be allowed to hold your Cryptos personally. But again, from an IRS standpoint, you got to kind of hear their position and see it is that if they feel like they need to protect you from yourself, and if you have too much control over the IRA asset, get yourself into trouble. Like maybe use the Crypto to buy a car or you need money and convert it to cash. So, as a tax attorney, I understand where they’re going with it, but we just got to live with the rules. Still, Cryptos are only one type of assets you can put in a self-directed IRA. Real-estate is another popular option.

Real Estate IRAs

Many people love to put real-estate in their IRA. There are generally two ways to do it. You can use a regular Self-Direct IRA, or you can use an LLC wholly owned by the IRA, managed by you to make the investment. But who does a Real Estate IRA LLC? Generally, people who want more control to open a Self-Directed IRA LLC. These individuals plan to do a lot of transactions like collecting rent, improvements to the property, paying a contractor or landscaper, etc. In these cases, an LLC will make sense. However, if you’re buying a piece of land, or a one-time investment, you don’t need an LLC for your real estate IRA. You can simply open a Self-Directed IRA, without the cost of the LLC.

There are no right or wrong decisions when opening a real-estate IRA. It’s based off what you want. But generally, the limited liability protection, the control and privacy are the main reasons people are setting up LLCs to buy real estate.


Thank you for joining me on Adam Live. If you have any questions, contact us at IRA Financial.


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