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Self-employed workers may benefit from establishing a Solo Self Employed 401k plan. The plan is limited to themselves and their spouses. If one more employee is hired, then the plan must be switched to a “Simple 401k plan.” There are many benefits to having a Solo 401k plan, and greater tax savings is just one of them. They are very easy to establish and do not require the rigorous legalities of other 401k plans. If you previously invested in a 401k plan or other retirement plans, you can consolidate them into your Solo 401k plan. Another great reason to choose a Solo 401k plan is that you can take a tax free, penalty free loan of up to half of your 401k plan.
|Jennifer Mathes, Ph.D.|