My favorite perk of being a business owner or having a side hustle:
You get access to the most powerful retirement plan in America - a Solo 401k
Here are 10 reasons why everyone eligible should set one up before December 31: (& why pick this over a SEP IRA)
You get access to the most powerful retirement plan in America - a Solo 401k
Here are 10 reasons why everyone eligible should set one up before December 31: (& why pick this over a SEP IRA)
1 - Super high contribution limits
You can contribute $66,000 this year and $69,000 next year
If you are over 50, that jumps to $73,500 this year
You can take the entire contribution amount as a giant tax deduction if you'd like!
Much easier to max this out vs a SEP
You can contribute $66,000 this year and $69,000 next year
If you are over 50, that jumps to $73,500 this year
You can take the entire contribution amount as a giant tax deduction if you'd like!
Much easier to max this out vs a SEP
2 - Invest in any asset you like
Unlike your corporate 401k plan that is super limited in investment options, you can invest in any eligible asset from a Solo 401k
Stocks, ETF's, crypto, startups, venture funds, real estate - you pick!
Unlike your corporate 401k plan that is super limited in investment options, you can invest in any eligible asset from a Solo 401k
Stocks, ETF's, crypto, startups, venture funds, real estate - you pick!
3 - Tax-free compounding
Like all other retirement accounts, all the growth inside the account is tax-free until you withdraw your money
That means when you buy and sell any assets in the account, you don't pay any taxes
That means your money grows and compounds faster
Like all other retirement accounts, all the growth inside the account is tax-free until you withdraw your money
That means when you buy and sell any assets in the account, you don't pay any taxes
That means your money grows and compounds faster
4 - It pairs really well with a defined benefit plan
Make $300,000+ with a consistent income?
You can also set up a cash balance plan in combination with your Solo 401k to defer 6-figures+ of taxes every single year
A SEP doesn't pair well & allows you a smaller contribution
Make $300,000+ with a consistent income?
You can also set up a cash balance plan in combination with your Solo 401k to defer 6-figures+ of taxes every single year
A SEP doesn't pair well & allows you a smaller contribution
5 - You can easily borrow money from your Solo 401k
You can borrow the maximum of 50% of your account value or $50K at any time, for any reason
You have to pay a fair market interest rate -- but the interest gets paid right back to your plan!
Makes it super powerful
You can borrow the maximum of 50% of your account value or $50K at any time, for any reason
You have to pay a fair market interest rate -- but the interest gets paid right back to your plan!
Makes it super powerful
6 - Roth contributions
You can contribute $22.5K as an employee to a Solo 401k
If you want, you can make this as a Roth contribution - which would be entirely tax-free at retirement!
While SEP's now support Roth, the guidelines are unclear & so no providers support it yet
You can contribute $22.5K as an employee to a Solo 401k
If you want, you can make this as a Roth contribution - which would be entirely tax-free at retirement!
While SEP's now support Roth, the guidelines are unclear & so no providers support it yet
7 - "Mega Backdoor" Roth
A Solo 401k also allows you to take advantage of a big tax loophole: the mega backdoor Roth
This entails an optional after-tax contribution of up to $66K
You then convert that to a Roth IRA to get $66K in Roth dollars every single year - very powerful!
A Solo 401k also allows you to take advantage of a big tax loophole: the mega backdoor Roth
This entails an optional after-tax contribution of up to $66K
You then convert that to a Roth IRA to get $66K in Roth dollars every single year - very powerful!
8 - Backdoor IRA's are much easier with a Solo 401k
You can transfer all your other pre-tax retirement account money like a SEP IRA, old 401k's etc. to a Solo 401k
Since it's a 401k, it's not subject to the "pro rata rule"
while doing a backdoor IRA
You can transfer all your other pre-tax retirement account money like a SEP IRA, old 401k's etc. to a Solo 401k
Since it's a 401k, it's not subject to the "pro rata rule"
while doing a backdoor IRA
9 - Easy to qualify for a Solo 401k (even with a full-time job)
All you need to open a Solo 401k is a side hustle from which you make any money at all
(investment income / rental income don't count)
But even if you earn $5 posting on this app, you are eligible!
All you need to open a Solo 401k is a side hustle from which you make any money at all
(investment income / rental income don't count)
But even if you earn $5 posting on this app, you are eligible!
10 - You can consolidate all your retirement accounts into your Solo 401k
You can move over all other accounts - your old corporate 401k's, your SEP IRA, regular IRA's into a Solo 401k
And have a separate account for pre-tax & Roth funds
Makes a lot of things easier!
You can move over all other accounts - your old corporate 401k's, your SEP IRA, regular IRA's into a Solo 401k
And have a separate account for pre-tax & Roth funds
Makes a lot of things easier!
Convinced that you want to set one up? Use @carryhq_
Do it before December 31 to have the most flexibility in types of contributions allowed
You can then fund it before the tax deadline
Share this with your biz owner friends:
Do it before December 31 to have the most flexibility in types of contributions allowed
You can then fund it before the tax deadline
Share this with your biz owner friends:
@carryhq_ If you have questions or want to learn more about how a Solo 401k works
And how it compares to a SEP IRA
Teaching a free workshop on Thursday at 2pm ET on the topic - streamyard.com
Will send a replay to everyone who joins too!
And how it compares to a SEP IRA
Teaching a free workshop on Thursday at 2pm ET on the topic - streamyard.com
Will send a replay to everyone who joins too!
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