It is no different than any other 401k, except that it only covers the owner and maybe also, his or her spouse. What Is a Solo 401K?Īccording to the IRS’s own website, a Solo 401k is simply a one participant 401k plan. This often results in meaningful improvements for your retirement goals. Therefore, you can grow your investment profits without paying taxes. When you contribute funds to a retirement plan, they grow tax-deferred or tax-free. The more money you put away, the more your money can grow. High contribution limits can mean big changes for your financial future. Or you can do a combination of both all within the same Solo 401k plan. Or you can also do after-tax Roth Solo 401k contributions. You can do tax deductible traditional Solo 401k contributions to help lower your taxable income. In addition to high Solo 401k contribution limits, there is also a lot of flexibility in how to contribute. These increases continue to encourage adoption of these Uni-k, Solo-k, or One participant 401k plans. Because of this its very advantageous for freelancers, independent contractors, and small businesses to save for retirement. Solo 401k contribution limits are very high and they keep getting higher, year after year.
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