A Solo 401(k) is a self-directed retirement plan. It is sometimes referred to as an Individual 401(k), a Self-Directed 401(k), or a Self-Employed 401(k), but each term is just another name for the same product. This specialized platform was designed for self-employed individuals, whether you are a sole proprietor, LLC, partnership, corporation, independent contractor, or individual practitioner.
Broad Financial’s Ultimate Solo 401(k) improves on the brokerage-based Solo 401(k) model by allowing you to diversify investments beyond the standard, stock and bond options of Wall Street, and allows you to invest in alternative assets such as real estate, precious metals, private loans, etc. The Ultimate Solo 401(k) also allows the investor to :
- Take a loan from his or her account
- Redirect a portion of the contributions into a Roth sub-account
- Open a checking account for greater flexibility in investing
You accept risks every day as an entrepreneur, but a secure retirement doesn’t have to be one of them. Broad Financial’s Ultimate Solo 401(k) gives you the freedom to work for yourself today, and retire in confidence later.
Solo 401(k) Eligibility Requirements
You are eligible for a Solo 401(k) if:
- You are self-employed
- Have no full-time employees (1000 or more hours/year) other than your spouse
It really is that simple. You can even work another “regular” job and still take advantage of the Ultimate Solo 401(k), as long as you have some self-employed income.
How the Ultimate Solo 401(k) Works
Setting up a self-directed IRA with Broad Financial is easy.
As with a corporate 401(k) plan, your Ultimate Solo 401(k) will have a dedicated trust account, with you as the sole trustee. That means no custodian is necessary. You may open a checking account at any bank of your choosing, which gives you full, exclusive access to the assets in your Ultimate Solo 401(k).
A variety of existing retirement accounts can then be easily rolled over into your Ultimate Solo 401(k), including:
- Traditional IRAs
- Corporate 401(k)s—depending on your current 401(k) provider’s policies
- SEP IRAs
- Keoghs and many other profit-sharing/pension plans
You also have the freedom and power to invest, in real time, in a wide variety of alternative investments. Checkbook Control allows the savvy entrepreneur to invest in markets he or she understands, without the hassle of extra paperwork and red tape.
Advantages of the Ultimate Solo 401(k)
For the self-employed individual, the advantages of a Solo 401(k) are enormous. Broad Financial’s Ultimate Solo 401(k) with Checkbook Control features the most comprehensive features available for the platform.
- Confidence in your accounts — With an Ultimate Solo 401(k) you can reach beyond Wall Street to secure your retirement in assets that you are familiar with. Real estate, small businesses, foreclosures, and precious metals are all acceptable alternative investments.
- Total control of your investments — Control your own retirement account with Checkbook Control. When you want to invest, simply write a check.
- Maximum savings for retirement— If you’re under 50 years old, tax-free contribution limits for 2015 are $53,000/year, and up to $18,000 can be Roth contributions. If you’re 50 or older you can contribute $59,000 as of 2015, and up to $24,000 as Roth contributions. All of those limits double if your spouse works with you.
You can also say goodbye to transaction and custodial fees.
- Freedom over your finances— If you ever need to borrow money from your Ultimate Solo 401(k), you can. You may borrow up to $50,000 from your Solo 401(k) to use however you like: from paying for a child’s college tuition, to growing your business, and more.
As an entrepreneur, you work hard to build your own wealth. Your retirement savings platform should let you work hard to maximize, direct, and keep it. The Ultimate Solo 401(k) gives you more options and more control.
Acceptable and Prohibited Investment Options
The opportunity to grow your retirement savings through alternative investments is one of the most attractive features of self-directed retirement planning. Acceptable alternative investments include:
- Real Estate
- Gold and silver
- Private loans
- Private placements
- Life insurance contracts
- Stock in an S-corporation, LLC, partnership, etc.
- Stocks, bonds, and mutual funds
- Tax liens
- Movies, books, and songs
The only asset that is not allowed in a solo 401(k) is purchasing collectibles—such as baseball cards, art, or stamps. All other investments, alternative and traditional, are allowed.
Your solo 401(k), however, cannot engage in any “Prohibited Transactions”, as follows:
- Purchasing property that you or a member of your family personally own.
- Purchasing property from anyone who provides a service to your retirement plan.
- Personally occupying a property owned by your Solo 401(k).
- Receiving a salary or fee for managing your own Solo 401(k).
- Investing in, doing business with, or directly benefiting a “disqualified person” (see below).
- Doing business with an entity of which at least 50% is owned by a disqualified person.
Disqualified persons include:
- Your spouse
- Your parents
- Your grandparents
- Your children (and their spouses)
- Your grandchildren (and their spouses)
- Your investment advisors
- Anyone who provides a service to your retirement accounts
Investing in assets that benefit disqualified persons is prohibited because those transactions use funds reserved for a future benefit, to provide a present benefit.
How to Get Started with an Ultimate Solo 401(k)
If you have at least some self-employment income, and you’re ready to take charge of your retirement plan with the Ultimate Solo 401(k), call us today at (800) 395-5200 or fill out the contact form in the sidebar. Broad’s expert advisors will take care of the paperwork, and you can start growing your savings and regain confidence in your retirement.