Where did the time go? 2019 is quickly coming to a close. And that means you have 60 days to open your Solo 401k for 2019!
According to IRS Publication 560, all employer-sponsored plans must be established by December 31st (or the last day of the tax year). That means you have just under two months to get started and establish your Solo 401k plan.
The Solo 401k is the most powerful retirement account in existence. If you’re a small business owner, then you may benefit from the Solo 401k. In many ways, the Solo 401k is far more powerful than a SEP IRA or any other type of self-directed retirement plan.
The Solo 401k is a new, but powerful tool to help you control your retirement funds. If you were doubting the legitimacy of such a powerful, the IRS even has a whole page on their website dedicated to the Solo 401k.
There are 3 reasons to start your Solo 401k in 2019:
2019 Solo 401k Deadline: Tax Deduction
With the Solo 401k by Nabers Group, you can contribute up to $56,000 per year. If your spouse participates in the plan with you, you each can contribute that amount. If you are age 50 or older, you can contribute up to $62,000 per year. That means you can contribute up to $124,000 per year to the Solo 401k plan – tax deductible.
That’s a huge tax savings.
In fact, Solo 401k contributions will probably have a bigger effect on your taxes than business deductions, standard deductions, itemized deductions, and more…combined. The truth is that contributing to your Solo 401k not only lowers your taxes, but also grows your retirement nest egg. In turn, you’re saving more for the future and setting yourself up for financial success.
Click here to access our Solo 401k contribution calculator to see how much you can deduct! The 2019 Solo 401k deadline to get started is only 60 days away, so don’t delay!
Good news: If you setup your plan by the 2019 Solo 401k deadline, you have until tax day to actually deposit your contributions. That means you only have to do a little bit of paperwork not to buy yourself enough time to make those big contributions and tap into poential big tax savings!
So, you’re able to contribute six-figures to your Solo 401k and make a huge dent in your taxes. But what do you do after the money is in your control? With the Solo 401k, you can invest in any number of investments including real estate, apartment syndications, bitcoin, private placements, promissory notes, and more!
The IRS only has a short list of investments you cannot make with a retirement account:
- Collectibles: wine, collectible coins, stamps, artwork, etc
- Prohibited transactions
The IRA outlines prohibited transaction rules in section 4975 of the Internal Revenue Code. The Prohibited Transaction rules typically have more to do with who your Solo 401k is transacting with, rather than what you’re actually investing in. Make sure your Solo 401k doesn’t directly do deals with:
- You or your business
- Your spouse or their business
- Your parents or children (and their businesses)
In short, stick to having your Solo 401k transact with unrelated third-parties. From there, you have the freedom to invest your money your way and make it grow!
Access High Roth Contributions for 2019
A unique offering in Solo 401k plans by Nabers Group is the Mega Backdoor Roth. You can use Roth funds to grow your money tax-free. But, typically you’d be limited in the amount of Roth funds you can put into a Roth 401k. With the Nabers Group Solo 401k, you can put in up to $62,000 per person, per year into your Roth funds!
Our plans allow you to use a special strategy wherein you can make voluntary after-tax contributions (up to $62k per person, per year) and then convert those funds in-plan to Roth funds. If your goal is to get as much money into Roth, this is a strategy you should definitely consider!
As you can see, the Solo 401k is an extremely powerful retirement plan. If you own your own business, the Solo 401k can provide far more benefits than any other type of small business retirement plan. Additionally, you have the freedom to invest your money your way in almost any asset you choose.
Couple the investment freedom with the incredible tax deductions and ability to stuff up to six-figures per year in Roth and you have a vehicle that’s ready to catapult you to wealth freedom.
Ready to get started? Our team is ready to help. Click here to setup your plan today!