The Solo 401k plan is one of the best retirement options available to self-employed individuals. But with so many plan providers out there, it can be hard to determine who you should trust with your business needs.
In this article, we will review the most impressive benefits inherent in a Solo 401k. After that, we will discuss how to select a good Solo 401k provider for your company.
Why Should You Open a Solo 401k?
For those that are self-employed, a Solo 401k offers three phenomenal benefits.
First of all, the Solo 401k plan allows for the highest maximum contribution limits for single-member businesses. Specifically, those with a Solo 401k account can contribute a grand total of $57,000 per year from the combination of employee and employer contributions (who are both you in your single member business!).
Secondly, Solo 401k plans allow you to choose how your money is taxed. You can elect to make traditional contributions, which means your money is taxed when you make your withdrawals. Alternatively, you can choose to make Roth contributions, which means your money is taxed when you make your contributions. Whichever option makes the most sense for you and your business is up to you.
Lastly, if you ever need to, you can take out loans of as much as $50,000 from your Solo 401k account. You may correctly assert that no one should ever touch the money in their retirement account until they are ready to make withdrawals in retirement. However, single-member companies may find themselves in a tight spot, should they a tragedy or difficult financial situation befall them.
How to Choose a Good Solo 401k Provider
Once you’ve decided that a Solo 401k sounds like the right plan for your business, you’ll need to select a plan provider. There are a number of considerations you’ll want to make when selecting your plan provider, including the following:
- Are there any extra costs associated with the plan? Unfortunately, some plan providers will impose fees on Solo 401k accounts. If you can, you should seek out a plan that doesn’t have any extra costs.
- How complicated is it to set up the plan and make changes? You should find a plan provider that makes it easy for you to log on, access your information, and make any changes you want. Needlessly complicated or glitchy software can create a headache for you, when all you want to do is monitor your plan.
- Is there anyone that can help if I have questions? Hopefully you never need to ask any questions and are able to maintain your plan without any hurdles for many years to come. But along the way, it’s possible that you may have questions or concerns. If so, you should know that there is a dedicated customer service team that can take your call and help you find a solution to your issues.
A Solo 401k plan is an excellent retirement option for the self-employed and there are many great providers out there ready to take your call today. If you’re ready to start your Solo 401k plan, call now!