Eight Questions And Answers About Solo 401(k) Retirement Plans

One of the benefits many corporate employees have experienced over the years is the ability to save money for retirement via a company sponsored 401(k). Now this advantage can be had by all business owners through a fund called solo 401(k). Following are eight questions and answers about this topic.

What is a Regular 401(k)?

This is a retirement plan offered by many companies where employees save a portion of their earnings. The earnings put into a 401(k) plan are deducted before taxes are taken from the paycheck. The idea is that when you retire, you will be in a lower tax bracket and won't need to pay as much in taxes when you pull money out of your 401(k) retirement plan.

What is a Solo 401(k)?

It is a retirement plan similar to a regular 401(k) that owners of small businesses can take advantages of.

What types of businesses qualify for a solo 401(k)?

If your business is a family held business, a sole proprietorship, a partnership, or a small corporation, you may qualify for this type of 401(k). A 401(k) plan administrator can help you determine the specifics available to your company.

What is the benefit?

According to the Wall Street Journal online, the biggest benefit of using a one is that you can contribute larger amounts to this savings plan than with other individual retirement plants.

How much money can you put into this type of account?

Generally speaking, you can put up to $49,000 into this kind of 401(k) if you are less than 50 years old. If you are older than 50, you can put away $54,500. All of this money is tax deferred.

What other benefits are there?

You don't have to limit your investments to stocks or mutual funds. With this specific retirement plan, you can also invest in real estate, hedge funds, gold, private equity, and private loans to name a few.

Can you borrow from a solo 401(k) to grow your business?

Yes, you can borrow funds from a this account under certain circumstances, and one of these is definitely to grow your business. As of 2011, you can take out a loan for 50 percent of the balance with a limit of $50,000.

Can your spouse participate in a solo 401(k)?

Yes, a spouse can participate in a solo 401(k) under certain conditions that can be explained by your plan administrator.

About the Author:
My Solo 401k is a 401(k) plan administrator enables you to invest your retirement funds when, where, and how you want. (http://www.mysolo401k.net/)

Article Originally Published On: http://www.articlesnatch.com

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