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A new retirement plan that is causing a lot of buzz in the financial world is the open Solo 401K. This type of plan is not readily offered or available with all the financial representatives. Many registered representatives or the brokerage firms that they represent may not be aligned with a financial institution that offers these types of retirement programs. The best source to research this type of plan is the internet. Many hours of meetings with representatives, or dozens of phone calls may very well be saved with research from the comforts of your own home or office. Business owners that do not have any employees or employ any staff members may be eligible for an open Solo 401K. This is available if you are the sole owner of the business; however a spouse can be included in the plan. Another qualifier is that you will not need to be hiring any employees or any staff in the future. As an owner of an open Solo 401K you can contribute up to $40,000 a year. For business owners who are 50 years old or older can also contribute an additional $2,000 that is deemed as a catch-up contribution. The $40,000 contribution can be made as a lump sum or can be contributed through the year. Once the limit of the $40,000 contribution has been met no additional contributions are allowed for the year, with the exception of the $2,000 catch-up allowance. The benefits of an open Solo 401K retirement plan: • Eligibility to take out a loan: In a open solo 401k retirement plan, if $100,000 has already been contributed in your plan, you can apply for a $50,000 loan. • Deduct your contributions from your taxes: Making contributions into your Solo 401K retirement plan qualifies you to take tax deducts with your contributions. • Tax deferred basis: Your contributions grow tax deferred you will only pay taxes on the amount that is withdrawn. • Tax savings: You will experience tax savings based upon your yearly income. These tax savings that are available with the open Solo 401K retirement plan are significant in most plans and levels of yearly income. There are responsibilities required when setting up a Solo 401K. You must have a trustee that has been selected as to the placement of your assets. The owner of the Solo 401K can act as their own trustee, although this will require a great deal of prudent planning. Additionally, a comprehensive plan must be devised that includes rules and guidelines detailing how the plan is to be operated. Of course there are many standard plan documents that are available; these will be considered along with their costs when you begin to set up your plan. There are many financial advisors that will set these sorts of plans up for you, or will direct you to financial services representatives that will set up the account. There are fees involved with these types of services. There are the set up fees, and other additional fees that will vary from one company to another. The fees need to be fully explained to you prior to setting up your account for full disclosure. Some fees may include an annual maintenance fees, transfer fees, sub account fees, and withdraw fees as well as additional miscellaneous. These fees will depend on the various companies, and what types of services you will need for your account. If you are knowledgeable in this area, you may be able to conduct some of services yourself such as bookkeeping to lower any additional annual charges. This is a financial investment and as such you will need to do your due diligence. Get quotes from different registered representatives and financial advisors before investing your hard earned money. This is your money and your future, make sure you have a say and are comfortable with the decisions you make
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