The IRA Financial Group, the leading provider of IRS compliant Solo 401(k) Plans, announces the strong demand from software developers for self-directed Solo 401(k) Plans Vs. the SEP IRA. “Until recently software developers were looking to establish a SEP IRA as their retirement vehicle of choice,” stated Adam Bergman, a tax attorney with the IRA Financial Group. However, the recent surge in popularity of the Solo 401(k) Plan based on the significant tax and investments inherent benefits compared to the SEP IRA as contributed to the popularity of the Solo4 01(k) Plan. IRA Financial Group’s Solo 401K plan is perfect for self-employed Information Technology professionals looking to maximize their retirement savings.
The rising popularity of the Solo 401(k) Plan vs. the SEP IRA is a result of the EGTRRA tax law change that became effective in 2002. The law changed how salary deferral contributions are treated when calculating the maximum deduction limits for contributions to a Solo 401(k) Plan. This change created an opportunity for self-employed professionals, such as software developers and IT professionals, with no employees to put away additional amounts toward their retirement.
A Solo 401(k) Plan, also known as an Individual 401K or Self-Directed 401(k) Plan, offers one the ability to use their retirement funds to make almost any type of investment on their own, tax-free and penalty-free without requiring the consent of any custodian or person. “Establishing a Solo 401(k) Plan offers a number of tax, retirement, and investment advantages,” stated Adam Bergman, a tax attorney with the IRA Financial Group. “IRA Financial Group’s Solo 401(k) plan is unique and so popular because it is designed explicitly for the self-employed professional,” stated Mr. Bergman.
“There are many features of the IRA Financial Group’s Solo 401(k) plan that make it appealing for small business owners over the SEP IRA, such as high employee deferral contributions, loan feature, catch-up contributions, and no-tax on non-recourse leverage for real estate transactions, ” stated Mr. Bergman. IRA Financial Group’s Solo 401(k) Plan high contribution limits will allow a plan participant to make annual contributions up to $51,000, with an additional $5,500 catch-up contribution for those over age 50. Additionally, IRA Financial Group’s Solo 401(k) Plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, or anything else. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest.