Have you ever felt like you would be much happier working for yourself? This is a feeling that many workers have at one point or another, and some of them pursue their dreams, opening their own business.
In many ways, working for yourself is a scary prospect. You are required to take on the entirety of the risk, you are responsible for all of your taxes, and you have no one to blame but yourself if things go poorly.
However, in other ways, a solo venture is great: you get to set your own hours, you keep all of the profit, and you can take vacations whenever you want. And perhaps one of the best perks of all, is the ability to open a Solo 401k retirement plan.
Why Should I Start a Solo 401k?
The benefits inherent in a Solo 401k are many, but the three major ones are as follows:
- Incredible Maximum Contribution Limits
When it comes to a Solo 401k plan, the independent worker is considered to be both an employer and an employee. This means that, in total, someone who maintains a Solo 401k plan can invest as much as $57,000 per year in their plan. This is due to the fact that employers can save $37,500 and employees can save $19,500. With these contribution limits in mind, it’s easy to see how beneficial it is for an independent worker to open a Solo 401k plan.
- Multiple Tax Options
If you’ve been researching retirement planning options, you’ve likely come across the term “Roth” contributions. Essentially, a Roth contribution is one that is made “after tax”. The contributor pays taxes up front, and enjoys tax-free withdrawals whenever it’s time for them to retire.
But for some individuals, it makes more sense to make “Traditional” contributions. Traditional contributions are not taxed when they are invested, but they are taxed as they are withdrawn.
The Solo 401k lets you decide which method makes the most sense for your business. Whatever your thoughts are on the future of taxes, you have flexibility with a Solo 401k.
- Loans When Needed
As we’ve unfortunately witnessed throughout the years, disasters, accidents, and other terrible things can happen in an instant. For independent workers, there are few places to which they can turn when they encounter tough times. Luckily, a Solo 401k enables contributors to take out loans of as much as $50,000, if needed. Of course, in an ideal world you would let your money grow in your retirement fund. But there’s no telling what the future holds, so it’s nice to have some security when things take an unfavorable turn.
Are you Ready to Start Your Solo 401k?
If you have decided that a Solo 401k sounds like the right plan for you and your business, contact a Solo 401k provider today! These helpful individuals will talk you through all of your options and assist you in determining the best way to structure your retirement plan.