There are believed to be several hundred thousand Solo 401K Plans in existence today. The Solo 401K Plan is also referred to as an Individual 401K Plan or Self Directed 401K Plan. Most sole proprietorships and small business owners are not aware that options exist other than a Fidelity sponsored Solo 401K Plan. However, options do exists and in most cases the options out there are far more advantageous to a sole proprietorship and small business owners from a tax and retirement standpoint.
A true Solo 401K plan is unique and so popular because it is designed explicitly for small, owner only business. There are many features of the IRA Financial Group’s Solo 401K plan that make it so much more appealing than a Fidelity sponsored Solo 401K Plan.
High Contribution Limits: While an IRA only allows $5,000 contribution limit (with a $1,000 additional “catch up” contribution for those over age 50), like a Fidelity Solo 401K Plan, a plan participant of IRA Financial Group’s Solo 401K Plan can make annual contributions up to $49,000 annually with an additional $5,500 catch up contribution for those over age 50.
Loan Feature: While Fidelity’s Solo 401K Plan offers no loan feature, IRA Financial Group’s Solo 401K 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, personal or business investments, a car, vacation, or anything else. The loan has to be paid back over a five year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate)
“Checkbook Control”: The most noteworthy benefit of the IRA Financial Group Solo 401k Plan is that it offers the plan participant checkbook control over his or her retirement funds. In the case of a Fidelity Plan, the plan participant is relegated to making traditional investments such as stocks and or mutual funds. In addition, the Plan account is required to be opened at Fidelity. With IRA Financial Group’s Solo 401K Plan, the plan account can be opened at any local bank, including Chase and Wells Fargo in addition to Fidelity. In addition, with IRA Financial Group’s Solo 401K Plan, the plan participant can make almost any traditional as well as non-traditional investments, such as real estate precious metals, tax liens, third-party lending, notes, stock, private business, and much more. With IRA financial Group’s Solo 401K Plan, the Plan participant has the freedom to make the investments he or she wants while at the same time to open the 401K account at any local bank. This flexibility allows the Plan Participant (you) to serve in the trustee role. This means that all assets of the 401K trust are under the sole authority of the Solo 401k participant. Unlike with Fidelity’s Solo 401K Plan which requires one to make stock and other financial related investments, with IRA Financial Group’s Solo 401K Plan, making a Solo 401K Plan investment is as simple as writing a check.
Roth Type Contributions: Unlike with the Fidelity Solo 401K Plan, IRA Financial Group’s Solo 401K Plan contains a built in Roth sub-account which can be contributed to without any income restrictions.
Roth Conversion: Unlike with the Fidelity Solo 401K Plan, IRA Financial Group’s Solo 401K Plan allows for the conversion of a traditional 401(k) or 403(b) account to a Roth sub-account. However, the Solo 401K Plan participant must pay income tax on the amount converted.
Cost Effective Administration: Just like the Fidelity Solo 401K Plan, IRA Financial Group’s Solo 401K Plan is easy to operate. There is generally no annual filing requirement unless your solo 401K Plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ). Unlike Fidelity, the tax attorneys at the IRA Financial Group will assist you in completing this form it is required.
Exemption from UDFI: Unlike with a Fidelity Solo 401K Plan which does not permit real estate investments with plan assets, using IRA Financial Group’s Solo 401K Plan will allow one to use non-recourse leverage tax-free when making real estate investments with plan assets.
IRA Financial Group will take care of setting up your entire Solo 401k Plan. The whole process can be handled by phone, email, fax, or mail and typically takes between 2-7 days to complete, the timing largely depending on the state of formation and the custodian holding your retirement funds. Our 401k experts and tax and ERISA attorneys are on site greatly reducing the set-up time and cost. Most importantly, each client of the IRA Financial Group is assigned a tax attorney to help with the establishment of the Solo 401k Plan. You will find that our fee for this service is significantly less than other companies that perform the same or similar services.