4 Benefits of a Solo 401(k) for Self-Employed People
Most employees consider their 401(k) account a vital benefit. Employers offer these plans to encourage retention and help their employees save for...
In order to be eligible for the Self-Directed Solo 401(k) account, you must be self-employed and have no full time employees. Further eligibility requirements and exceptions below.
You and your spouse are the only people who can own the business. There can be no other outside ownership, or you will not qualify for the Solo 401(k).
To qualify for a Self-Directed Solo 401(k), you cannot have any full-time common law employees other than your spouse. You can have part-time employees, but if you hire full-time employees in the future, you will have to stop contributing or come up with another retirement plan solution (maybe a SEP-IRA).
My other business has employees... but not the one I want to connect to the Solo 401(k). Does that still count?
Yes, unfortunately. The IRS can see this as hiding a retirement plan from your employees in another business. If you have employees, you can be subject to "discrimination testing" to make sure that if you are giving yourself retirement benefits or an employer match, that your other employees are also eligible for fair employer match and able to contribute to retirement accounts.
If you ignore this, you could be subject to retirement backpay or legal action from your employees as a violation of ERISA law by enforcement of the Department of Labor. (DOL)
Most employees consider their 401(k) account a vital benefit. Employers offer these plans to encourage retention and help their employees save for...
When choosing an alts-capable retirement account, choosing the right type of account can have a significant impact on your flexibility and ease of...
A Solo 401(k) is a retirement plan that can be used by the self-employed. If you're self-employed and looking to set up a retirement plan, then a...