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The Growing Trend

There seems to be a growing trend among smart Individual Retirement Account owners and 401k plan holders who are willing to be in the forefront of their finances by investing their retirement funds in their Self-Directed IRA. These accounts require the owners to make investment decisions as well as investments on behalf of their retirement plan.

Self Directed IRA LLC with a checkbook control or checkbook IRA allows the owner to make other investment selections regarding all their future investments. When using a self-directed IRA LLC with a checkbook control in your financial planning, you will have control of your retirement funds. You will be the one to make the decision on how your retirement funds and pension plan funds are to be invested. What this means is that you are in full control of your financial future. Since you are the signer on the checks, there’s no need to get the custodian involved or even ask for permission.

In 2010 and 2011 the total for Solo 401K limits has been $49,000 or $54,500 if you are 50 years or older. The Solo 401k contribution per year normally consists of two parts: a profit sharing contribution and a salary deferral contribution. You can arrive at the total allowable contribution by combining these two parts to get the maximum Solo 401K limit. Both of these contributions are flexible, discretionary, and can be changed at anytime.

Solo 401K plans allow workers in the United States to defer income taxes for them to be able to save for retirement. It is very similar to a self-directed IRA, the only difference is that a 401K is administered by the employer. An individual can choose to contribute a certain amount of his or her pre-tax salary. All the contributions and gains made towards the 401K account are tax deferred until the money is withdrawn from the 401K plan.

There are a number of solo 401K rules that come into play when dealing with IRA. Setting up a Solo 401K if you are a sole proprietor or small business owner makes a lot of sense. There are no complicated discrimination tests or the filing of form 5500. Form 5500 is a form that large corporations have to file with the IRS for their 401K to be compliant. The owner of a Solo 401K plan doesn’t have to worry until the plan reaches in excess of $25,000.

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Posted in Solo 401(k)

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