08-04-14 - Solo 401k

Solo 401k

A lot of real estate professionals work as independent contractors or self-employed individuals. Being in the real estate industry, you are most likely to succeed with a self employed retirement plan with Checkbook Control feature.

The ideal retirement account for real estate professionals, Solo 401k, is the top qualified plan for self-employed individuals and small business owners.

Here are some of the basic things to learn and understand about the retirement plan tailored for self-employed or independent real estate professionals. Learn about 401k, how it works, contribution limits and other important individual 401k rules.

  • The retirement plan allows account owners to use their retirement funds or savings in any investments of their choice.
  • The Solo 401 k plan is a beneficial retirement account for self-employed individuals with tax benefits and other investment privileges.
  • Individual 401k rules state that investors could use their retirement funds to finance investment ventures without securing permission or consent from authorized or appointed custodians.
  • As of 2014, the annual and max 401k contribution is $52,000 for those under the age of 50. Plan holders who are 50 years old and up could add $5,500 for their annual contribution which is also known as catch up contribution. Thus, for account holders aged 50 and above, their highest annual contribution limit is $57,500.
  • Unlike conventional 401k, a self directed Solo 401k is allowed to invest in real estate and other non-traditional assets. And unlike an IRA, a Solo 401k is also allowed to use non-recourse financing to leverage real estate investment without triggering UBIT charges.
  • Account holders are now allowed to borrow from the plan. The borrowed amount is payable over a time frame of five years. As long as the payment schedule is met, there is no tax or penalty charges on the loan. The individual 401k rules emphasize that borrowers could take out loans of a total value of $50,000 or up to 50% of their retirement funds, whichever is less.

Solo 401 k plan offers not only tax benefits and investment choices, but also the flexibility of tapping into your retirement savings in difficult times. Knowing the different fundamental individual 401k rules could help you learn more about how this retirement account works for you. It also shows the innumerable perks and benefits to enjoy.

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