Individuals who work for themselves can also maintain a 401k plan. A Solo 401k plan has been created to help self-employed people or owners of small businesses save for their retirement. Whether one's business is incorporated or not would not figure into one's qualification for a Solo 301k plan. Those who co-own partnerships can also qualify provided that only the partners are the company's full time employees. Hiring independent contractors for different projects would not disqualify an individual for a 401k Plan.
A Solo 401k plan has more benefits over other retirement plans of a similar nature. One of these is that you can contribute more to a Solo 401k plan than to other retirement plans. You can therefore have more money put away for retirement, and have a smaller taxable income as well. Additionally, it would give you the chance to get tax-free loans by using the balance of your account as collateral.
You may have an annual total contribution to your Solo 401K plan of $49,000 at the most (as of 2011) if you are 49 years old and younger, or $54,500 if you are at least 50 years old. The distribution for this amount is a maximum of $16,500 from what you earn as wages, and the rest from what your business earns. Just like in employee 401K plans, the money in Solo 401k accounts, both contributions and interest profits, also has a tax-deferred feature, and if you withdraw the account prior to reaching 59 years of age, you would have to pay a 10% penalty and the amount withdrawn would be subjected to income tax.
You may contact a good 401k plan provider and open an account with them. A requirement that would be needed from you are proofs of your self-employment and that the contributions you make are all coming from your self-employment income.
If you are maintaining any other retirement plans, it could be advisable to rollover these plans to a Solo 401k plan so that you can optimize your tax deferments. Go through your objectives for retirement and find out how a Solo 401k plan could contribute to this, as well as give you an idea on how much you may want to put in to the plan.
A Solo 401k plan has more benefits over other retirement plans of a similar nature. One of these is that you can contribute more to a Solo 401k plan than to other retirement plans. You can therefore have more money put away for retirement, and have a smaller taxable income as well. Additionally, it would give you the chance to get tax-free loans by using the balance of your account as collateral.
You may have an annual total contribution to your Solo 401K plan of $49,000 at the most (as of 2011) if you are 49 years old and younger, or $54,500 if you are at least 50 years old. The distribution for this amount is a maximum of $16,500 from what you earn as wages, and the rest from what your business earns. Just like in employee 401K plans, the money in Solo 401k accounts, both contributions and interest profits, also has a tax-deferred feature, and if you withdraw the account prior to reaching 59 years of age, you would have to pay a 10% penalty and the amount withdrawn would be subjected to income tax.
You may contact a good 401k plan provider and open an account with them. A requirement that would be needed from you are proofs of your self-employment and that the contributions you make are all coming from your self-employment income.
If you are maintaining any other retirement plans, it could be advisable to rollover these plans to a Solo 401k plan so that you can optimize your tax deferments. Go through your objectives for retirement and find out how a Solo 401k plan could contribute to this, as well as give you an idea on how much you may want to put in to the plan.
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