Solo 401k Plans: Planning For It Now Can Make A Big Difference
Everyone knows that the baby boomers of today are now hurrying to set up or improve their retirement funding. In just a small span of time, the career world as they knew it made a 360 degree turn and came out with a completely different face. Now, not everyone stays in a company for their entire life only to be rewarded by a gold watch and a pension. The in thing nowadays, or the newfangled way of making business opportunities, is to move from one job to another until ultimately gathering up enough skills and expertise to generate income for their retirement fund - and the earlier, the better. If you are a business owner, you have a wonderful chance of determining your retirement funds size and timing. You do not even have to pay anyone to do it for you. If you use a self-directed or solo 401(k), you can be your own personal investment manager. Aside from the usual options of stocks, bonds and mutual funds, you can also invest in non-traditional assets, among of which are: real estate investment property, mortgages and deeds of trust, private stock offerings, limited partnerships, structured settlements, foreign currency exchanges and secured and unsecured notes, among others.
For you to maintain the tax advantages of your solo plan, you need to steer clear of what the IRS calls prohibited transactions. In a nutshell, these include selling your personal property to your IRA or using it as security for a loan, as well as borrowing money from it to purchase things that are nor for investment purposes. You will also need to have asset protection as well. Solo 401(k) plans can be members of an LLC (or limited liability company) for purposes of liability protection. This of course is not really a strict retirement, but then again it is what smart people would do in order to preserve value while at the same time reducing risks of liability - no matter where you live. In addition, your solo 401(k) can also become a limited liability company member alongside the different accounts of your co-investors. The neat thing about this is that together you can combine your IRAs in order to yield bigger investment results. Indeed, going solo can have many benefits for the savvy self employed businessman - for as long as he makes it a point to sit down and really assess how to go about planning for his 401(k), as they say, the early bird gets the worm - or in this case, the early planner get bigger profits and a much brighter and stable future ahead of him. |
