In the recent times, there has been a drastic increase in the number of American entrepreneurs who are not saving enough for their retirement. Retirement is the last thing on the minds of self employed workers these days as they fear to set aside the money, which might come handy in keeping their business rolling. This is the biggest mistake that small business owners make and, therefore, miss out on the opportunity to build up their retirement savings.
Individual 401(k) / Solo 401(k) Plan
Solo 401(k) plan is one of the best retirement plans for the self employed and small business owners whose income is more than $100,000 or more. This plan offers tax-deferred growth potential and is very easy and cost-effective plan for small business owners. The feature that makes this plan an attractive retirement savings instrument is that the allowable contribution to an individual 401(k) plan will be much larger than what you can make under any other retirement plan. Since Solo 401(k) plan is a regular plan in combination with a profit-sharing plan, the owner can defer the maximum compensation under this plan, and can still contribute up to 25 percent of the total amount to the profit sharing plan.
The eligibility criteria for a solo 401(k) plan mainly comprise of the following two requirements:
Solo 401(k) plan also comes in another version as Roth Solo 401(k) to benefit those who are looking for a tax-free retirement solution for their proprietorship. As the state income tax rates are expected to rise in the future, it is one of the most effective ways of making your retirement investment tax-free, including currencies, precious metals, real estate, etc.
Benefits of a Solo 401(k) Plan
The features that make solo 401(k) or individual 401(k) plan so popular among self-employed business owners are:
Therefore, it is believed that solo 401(k) plan is a great retirement investment vehicle for small business owners worth considering, owing to its numerous benefits while planning your retirement.
In a world that's constantly evolving, so are the strategies of top brands. We're talking…
A strong company culture inspires teamwork, unity, and friendly competition. It installs the ‘at your…
Companies store sensitive information digitally almost every day. But unfortunately, it also increases the risk…
When you have an idea for a business, you’ll want to get started right away.…
When business concludes that they need a collection agency up their sleeve, it is imperative…
The FP Top Pick on Entrepreneur/Business Movie: https://www.youtube.com/watch?v=uM5DrGTClyA Watch the movie Crypto here. More movie links…