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5 Questions to Ask for Maximum Retirement Saving Benefits with Solo 401k Plan

“Destiny is no matter of chance. It is a matter of choice. It is not a thing to be waited for, it is a thing to be achieved.”

William Jennings Bryan

Being a self-employed, every professional holds his destiny in his hands. Taking control of your life is the first step towards achieving success and retirement is an extremely important part of life. How do you achieve maximum benefits with your retirement plan?

Step I: Asking the right questions

Step II: Look out for best options

Step III: Analyze them and start investing your money

Top 5 Questions You Should Ask Your Financial Planner

  • What are the plans that offer maximum contributions? Solo 401k and SEP IRA are the two self-employed retirement plans with maximum contribution limits of $52,000 for 2014 and $53,000 for 2015. Solo 401k allows catch up contributions for individuals above 50 years of age whereas SEP IRA doesn’t. In short, professionals above 50 years of age can add additional $5,500 for 2014 and $6,000 for 2015 in a solo 401k plan.
  • Does it offer traditional investment options? Solo 401k retirement plans offer multiple investment options including real estate, tax liens, private business, precious metals, and regular stock and mutual fund investments.
  • What is the deadline for Solo 401k contributions?  One can make both employer and salary deferral contributions up to April 15, 2015 for the financial year of 2014 and April 16, 2016 for the financial year of 2015. One can even file an extension for contributions up to October 15 of subsequent year depending on the type of business that sponsors the plan.
  • Can a retirement plan offer financial support during off-season? For every business owner, surviving through an off-season is the toughest challenge and it takes every single dollar to push the company further. Solo 401k retirement plans are designed to accommodate any such financial urgency. One can borrow up to 50% of fund value up to a maximum limit of $50,000. This loan is available at Prime Rate plus 1 percent, which makes it an affordable source of funding.
  • Are there any downsides of Solo 401k retirement plan? The only downside of solo 401k retirement plan is that one has to file returns if the fund value exceeds $250,000. However, even then, plan holder only needs to file a quick and simple form. At the same time, Solo 401k is only suitable for small businesses with no full-time employees (employees who do not qualify for retirement plans).

It is important to understand that investment options differ from one institution to another and it is extremely important to choose a flexible plan provider for Solo 401k retirement plans. 

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Comment by CECILIA D FOX on April 13, 2015 at 10:15pm

  I just contributed to a SEP IRA and saved a ton on taxes.  I put the refund toward my 2015 taxes instead of having to make an estimated payment. 

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