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A 401K Plan for the Self-Employed

Saving for ones retirement has become an even more important with the recent turmoil in the financial markets. With many Americans still trying to rebound from the 2008 stock market crash, selecting the right retirement plan vehicle becomes even more crucial. No longer is allocating all ones retirement assets to wall street investments believed to be a sound financial decision. Diversification of investments is now more important than ever.

A Solo 401K Plan, also known as an Individual 401K or Self Directed 401K Plan offers a self employed business owner the ability to use his or her retirement funds to make almost any type of investment, including real estate, tax liens, private businesses, precious metals, and foreign currency on their own without requiring custodian consent tax-free! In addition, a Solo 401K Plan will allow you to make high contribution limits (up to $55,500) as well as borrow up to $50,000 for any purpose.

Specifically the IRS designed self employed 401K Plan for the small business owner with no employees. A Solo 401K plan offers the same investment diversification advantages as a Self Directed IRA LLC, but without having to hire a custodian or create an LLC.

The Solo 401K Plan, also know as the 401k for the self-employed, will allow self-employed individuals the ability to save more for their retirement than any other IRA retirement solution. With a Solo 401K Plan, in 2012, a self-employed individual can make annual contributions of up to $50,000 ($55,500 if the individual is over the age of 50). Compare this to a Traditional IRA where the limit is $5,000 annually ($6,000 if the individual is over the age of 50). In addition, to the high contribution limit, the Individual 401K Plan will allow one to borrow up to $50,000 from the 401(k) Plan for any purpose with no tax and penalty. The loan can be used for any personal purpose, including starting a business, paying a mortgage, paying credit card debt, or even to take a vacation or buy a car. The 401(k) loan does have to be paid back over a five-year period at an interest rate of at least Prime as per the Wall Street Journal. As of January 21, 2012, the Prime Interest rate was 3.25%. Also, there is no pre-payment penalties, meaning the loan can be paid back at any time penalty free. Loan payments must be maid at least quarterly (four times a year), but can be made monthly or weekly. Note – failure to make a required loan payment would cause the entire loan to be treated as a taxable distribution (a 10% penalty may be imposed if the individual is under 591/2).

However, one of the most popular features of the Solo 401K Plan, is the ability to make traditional as well as non-traditional investments such as real estate, precious metals, tax liens, and much more. In other words, IRA Financial Group’s Solo 401K Plan will allow you to better diversify your retirement portfolio and protect your hard earn savings from the increasing risks associated with the U.S. stock market. Thus, in addition to having the opportunity to contribute up to $55,500 a year for your retirement, the funds may be invested in stocks as well as real estate and other assets classes to help better diversify your hard earn retirement savings.

To learn more about the benefits of IRA Financial Group’s Solo 401K Plan, please contact a 401K expert at 800-472-0646 or visit

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Posted in Solo 401(k)

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