2014 Self-Directed SEP IRA contributions to increase by $1,000, solo 401(k) plan continues to offer more tax and retirement benefits
Starting on January 1, 2014, the Internal Revenue Services (“IRS”) announced that the maximum one can contribute to a SEP IRA cannot exceed the lesser of: (1) 25% of compensation, or (2) $52,000 for 2014. “Although the self-directed SEP IRA contribution limitation have increased by $1,000 to $52,000 for 2014, one is still able to reach the maximum contribution faster with a solo 401(k) Plan,” stated Susan Glass, a tax professional with the IRA Financial Group.
Under the 2014 Solo 401(k) contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $17,500 to an IRA Financial Group solo 401(k) Plan. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $52,000, an increase of $1,000 from 2013.
For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $23,000. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $57,500, an increase of $1,000 from 2013.
The annual Solo 401k contribution consists of 2 parts, an employee salary deferral contribution and an employer profit sharing contribution. The total allowable contribution limits are combined to get the maximum Solo 401K contribution limit.
According to Ms. Glass, “Establishing a self-directed solo 401(k) Plan versus a self-directed SEP IRA provides many exciting advantages, including the ability to make employee deferrals in pre-tax or Roth of up to $17,500 or $23,000 if over the age of 50, borrow up to $50,000 tax-free and penalty-free, and the ability to buy real estate with a non-recourse loan with any tax,”
IRA Financial Group’s solo 401K plan is unique and so popular because it is designed explicitly for small, owner only business. With IRA Financial Group’s solo 401K plan, self-employed individuals or small business owners with no employees can benefit by making high annual contributions – up to $52,000 – with an additional $5,500 catch-up contribution for those over age 50, make traditional as well as non-traditional investments, such as real estate, as well as borrow up to $50,000 or 50% of their account value tax-free and penalty free. IRA Financial Group’s self-directed 401(k) plan is a trustee directed plan meaning the trustee and not the custodian is in charge of making investment decisions on behalf of the plan. With a solo 401(k) plan, in most cases the trustee will be the plan participant providing the plan participant with greater control and investment authority over his or her retirement funds. In addition, with IRA Financial Group’s solo 401K Plan, the plan account can be opened at any local bank, including Chase, Wells Fargo, and even Fidelity.
The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP and Dewey & LeBoeuf LLP.
IRA Financial Group is the market’s leading “Checkbook Control” Self Directed IRA and Solo 401k Plan Facilitator. We have helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate tax-free and without custodian consent!