For many, the idea of a Self-Directed Solo 401(k) plan—with its high limits and tremendous protections—is perhaps the best way to build wealth, especially as an entrepreneur or a business owner.
Charlotte, NC (PRWEB)
August 29, 2017
One of the most powerful ways to build wealth for retirement is to utilize an IRA—this is common knowledge. And for many, the idea of a Self-Directed Solo 401(k) plan—with its high limits and tremendous protections—is perhaps the best way to build wealth, especially as an entrepreneur or a business owner. James Hitt, CEO of American IRA in Asheville, NC, recently went to the American IRA blog to let investors know who is eligible for these sorts of plans.
Maximum combined contributions for this type of account can be up to $54,000 in 2017, the article notes, which helps explain why this type of account is such a powerful way for people to invest. But since the Solo 401(k) plan was created for a very specific type of situation, Hitt notes, it’s important to understand just who qualifies.
“There are certain criteria that have to be met even to establish a Solo 401(k) or make contributions,” the article notes. “And it’s not always the best answer for growing companies.”
Those eligible for a Solo 401(k) plan include those with self-employment or owner-employee income—which means that an investor would have to show income from self-employment or a salary from a C-corporation, S-corporation, partnership, or LLC.
These plans are also for those who do not have full-time employees outside of the individual themselves and the individual’s spouse.
The good news, Hitt notes, is that there are no maximum income thresholds for these types of accounts, which helps expand eligibility as well.
“People have to know just what kinds of investment vehicles are out there,” Hitt says. “There are those in this specific situation who might quality for a Self-Directed Solo 401(k), and aren’t taking advantage of the high limits and tremendous protections. Still, it’s important for every investor to know who qualifies for such a plan—and who doesn’t.”
The article goes into greater detail, as well, pointing out what happens when investors start hiring full-time…