Thanks to the Secure Act 2.0, which became law in December 2022, Solo 401(k) employer profit-sharing contributions can now be made in pre-tax or Roth.  This article will explore the tax ramifications for the employee and employee in the case of employer profit-sharing contributions made in Roth. However, before we get into the Solo 401(k) employer profit-sharing contribution roth rules, it is important to understand what a Solo 401(k) plan is and how the 2024 Solo 401(k) contribution rules work. What is a Solo 401(k)? A Solo 401(k) plan” is an IRS-approved retirement plan, which is desig ..read more

Using a Solo 401k to buy real estate may be more advantageous than a Self-Directed IRA if you meet the eligibility requirements for the plan and wish to use a nonrecourse loan. In this article, we’ll take a look at real estate investments with the Solo 401k. The Solo 401k A Solo 401k is a qualified retirement plan that is similar to a traditional 401(k), except this retirement plan covers one person. There are two eligibility requirements for establishing a Solo 401k plan, but if you meet them, the individual retirement plan can’t be beat. (1) You must generate a form of self-employment income ..read more

In this article, we provide a general overview of the Solo 401(k) plan distribution rules. It may seem unfair to some that one would need to satisfy certain rules before gaining access to one’s Solo 401(k) plan funds, but that is the way the rules work. When it comes to determining what funds in your plan you will have access to, the first thing to do is look at the Solo 401(k) basic plan document or speak with your plan administrator.  A Solo 401(k) plan is a great retirement plan for accumulating retirement wealth through high contributions and alternative asset investment opportunities ..read more

It’s easy to flip homes or engage in a real estate transaction with a Solo 401(k) plan. It’s as easy as writing a check from your plan bank account or wiring funds. Because you are the trustee of the Solo 401(k) – also known as the individual 401(k) or self-directed 401(k) plan – you have full authority to make investment decisions on behalf of your 401(k) plan without custodian consent. A primary advantage of the Solo 401(k) plan is that when you wish to purchase a home, you can make the purchase, pay for the improvements, and even sell or flip the property without involving a custodian. This ..read more

When it comes to making investments with a Solo 401(k) Plan, the IRS generally does not tell you what you can invest in, only what you cannot invest in. You are permitted to use a Solo 401(k) Plan to invest in options. The types of investments that are not permitted to be made using retirement funds is outlined in Internal Revenue Code Section 408 and 4975. These rules are generally known as the “Prohibited Transaction” rules. In addition to the Prohibited Transaction rules, the IRS imposes a levy or tax on certain transactions involving IRA funds. In general, when one uses IRA funds to invest ..read more

Since the creation of the Solo 401(k) Plan back in the early 1980s, the IRS (Internal Revenue Service) has always permitted a Solo 401(k) to purchase, hold, or flip real estate. By using a Solo 401(k) (also known as a Self-Directed 401(k) Plan or Individual 401(k) Plan) to buy real estate, you will be able to purchase: Raw land Domestic or foreign real estate Residential or commercial property Flip homes You can do much more tax-free and without requiring custodian consent. Flipping a Home is as Simple as Writing a Check With a Solo 401(k) Plan, flipping homes or engaging in a real estate tr ..read more

The Solo 401k checkbook control structure simplifies how you can purchase investments. By establishing a bank account for your plan, you can write a check, use a debit card, or wire funds on the spot. Solo 401k Retirement Plan A Solo 401k is perfect for sole proprietors, small businesses, and independent contractors. A Solo 401k plan is generally also referred to as a “checkbook control” Qualified Retirement Plan. In each case, a 401(k) plan is established whereby the participant serves as trustee and administrator of the Plan providing the participant with “checkbook control” over his or her ..read more

Choosing the best provider of the Solo 401k is an important decision that should be researched thoroughly. Below are several tips to help you select the best Solo 401k provider for your self-employed or small business retirement plan. 9 Tips to Choose the Best Solo 401k Provider 1. Work with a Tax & ERISA Professional There are several companies that advertise themselves to be the best Solo 401k providers. Yet in most cases, the people who draft your Plan documents and offer advice aren’t tax attorneys or even tax professionals. This is why it’s important to look for an experienced tax and ..read more

Investing in private equity investments with a Solo 401(k) will give you the freedom to make investment decisions on your own without custodian consent. Investments with a Solo 401k allow you to eliminate the expense and delays of using an IRA custodian. What is Private Equity Investing? The term “private equity” is used to describe pools of money from several investors that are established through a passthrough entity, such as a partnership or limited liability company (LLC) that are then used to acquire stakes in companies. Private equity funds make money by charging a small fee for managing ..read more

When it comes to using nonrecourse financing with a Solo 401k, retirement investors will be able to avoid a large tax on real estate investments. One of the primary benefits of using retirement funds, such as a solo 401k retirement plan to make investments is that, in most cases, all income and gains from the investment will flow back to the solo 401k plan tax-deferred or tax-free in the case of a Roth. This is because a 401(k) plan is exempt from tax pursuant to Internal Revenue Code (IRC) Section 401. In addition, IRC Section 512 exempts most forms of investment income a 401(k) generates fro ..read more