Feb 28

Choosing the Right Solo 401k Plan Provider

Selecting the best Solo 401(k) plan provider is an important decision that should be researched thoroughly.  Below are several tips to help you select the best Solo 401(k) Plan provider for your self-employed or small business retirement plan.

1. Always Make Sure You Are Working With a Tax & ERISA Professional: There are several companies on the internet that advertise themselves to be Solo 401(k) plan providers and experts, however, in most cases, the people that would be involved in drafting your Solo 401(k) plan documents as well as advising you are not tax attorneys or even tax professionals. Working with an experienced tax & ERISA professionals when looking for a Solo 401(k) Plan provider is crucial in ensuring that your plan will be properly setup as well as remain in full IRS compliance. The Solo 401(k) plan is based on the rules found in the Internal Revenue Code, which can be quite complicated to the non-tax attorney. Therefore, it is strongly advisable to work with a Solo 401(k) Plan provider, like the IRA Financial Group or Bergman Law Group, to establish your IRS approved Solo 401(k) Plan. Relying on the advice of a document processor or no-tax professional when it comes to establishing and maintaining your retirement plan puts your retirement future at great risk. Too many times, plan participants have unknowingly violated IRS rules when operating their Solo 401(k) Plan because a plan provider representative that was not qualified to provide relevant tax advice gave them inaccurate and incomplete tax advice or drafted the plan documents incorrectly. Make sure this does not happen to you – work only with qualified 401(k) plan tax & ERISA professionals who have been specifically trained on the special tax aspects of the Solo 401(k) Plan to establish and maintain your Solo 401(k) Plan.

Be smart when choosing your Solo 401k plan provider2. Open Architecture Self-Directed Solo 401(k) Plan Is the Way to Go: Not all Solo 401(k) Plans are the same.  Most Solo 401(k) Plans offered by a bank or financial institution are not self-directed.  What that means is that you will be restricted to making the investments offered by the bank or financial institution and will not be permitted to purchase real estate, precious metals, private business investments, option & currency trading, hard money loans, etc.  Once you adopt a Solo 401(k) Plan, you should have a plan that features all the IRS options available for qualified retirement plans, including the ability to make non-traditional investments, such as real estate. IRA Financial Group offers an open architecture Solo 401(k) Plan that allows you to make any IRS approved investment without requiring the consent of a custodian. As trustee of your Self-Directed Solo 401(k) Plan, you will have “checkbook control” over your plan funds and will have total control over plan assets.

3. Take Advantage of Your Right to Borrow up to $50,000 from Your Plan: Not all Solo 401(k) Plans include a loan feature, which is an IRS approved feature. IRA Financial Group’s Solo 401(k) Plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, personal or business investments, a car, vacation, or anything else. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate).

4. Be Sure You Have a Roth Option: Most Solo 401(k) Plan providers do not allow for Roth (after-tax) contributions. IRA Financial Group’s Solo 401(k) Plan contains a built in Roth sub-account which can be contributed to without any income restrictions.  In addition, most Solo 401(k) plan providers do not allow for in-plan Roth conversions or rollovers.  Whereas, IRA Financial Group’s Solo 401(k) Plan allows for in-plan Roth conversions. However, the Solo 401(k) Plan participant must pay income tax on the amount converted.

5. Ongoing Tax & 401(k) Plan Support is a Must: Just because your Solo 401(k) Plan has been established does not mean that you no longer need any ongoing tax and ERISA support.  Most Solo 401(k) Plan providers are headed for the exit once the plan has been established.  As you begin administering your Solo 401(k) Plan, whether it involves making employee deferral or profit sharing contributions, making a non-traditional investment, taking a plan loan, or considering a Roth conversion, you will want to be able to have the ability to consult with a specialized 401(k) Plan tax professionals and get specialized tax and ERISA advice based on your particular retirement or tax question.  The ongoing maintenance of the Solo 401(k) Plan is crucial in making sure your Solo 401(k) Plan remains in IRS compliance and that the IRS respects all your plan contributions and investment gains. Working directly with a 401(k) plan tax professional that has been specifically trained on the special tax aspects of the Solo 401(k) Plan will help keep your Solo 401(k) plan in full IRS compliance.

6. Take Control of Your Solo 401(k) Plan from the Plan Provider: Most Solo 401(k) Plan providers will require that you hold the plan assets at their institution. With IRA Financial Group’s Self-Directed Solo 401(k) Plan, you can hold the plan assets at the bank of your choosing and gain “checkbook control” over the funds. With IRA Financial Group, making an investment is as easy as writing a check.

7. Stay Away from Plan Providers who Outsource Their Plan Maintenance Services: Most Solo 401(k) Plan providers do not assist or offer advice with respect to the maintenance and administration of a Solo 401(k) Plan, including the completion of the IRS Form 5500-EZ. They generally refer all questions to an outside tax attorney or accountant. IRA Financial Group offers all of its Solo 401(k) Plan clients direct access to its in-house retirement tax professionals and CPAs regarding maintenance or administrative questions concerning the plan. Whether it’s answering a question about a plan feature, investment, an update in the law, or with help completing the IRS Form 5500-EZ, you will work one-on-one with an IRA Financial Group retirement tax professional and CPA who are familiar with your plan and retirement goals.

8. Stay Away from Excessive Annual Fees: Sine most Solo 401(k) Plans have less the $250,000 in plan assets, there would be no annual filing requirement for the plan. Hence, why pay excessive annual administration fees to a plan provider who will not be offering you or your plan any value or services. Even if your Solo 401(k) Plan has in excess of $250,000 of plan assets, the IRS Form 5500-EZ is quite simple to complete and should not be too costly.

9. Don’t Take Tax Advice from a Salesperson – Talk Directly with a 401(k) Plan Tax Professional or CPA: Many times a salesperson or representative of a Solo 401(k) Plan provider will offer you tax or ERISA guidance with respect to a 401(k) plan feature or an investment without lacking the adequate knowledge or expertise. Make sure you are only receiving plan related advice or information from a specialized 401(k) plan tax professional. Too many times, plan participants have made improper plan contributions or invested in a prohibited transaction because they were mislead by a plan provider representative that was not qualified to provide proper tax advice regarding the unique features of the Solo 401(k) Plan. Working directly with a 401(k) plan tax professional that has been specifically trained on the special tax aspects of the Solo 401(k) Plan to establish and maintain your Solo 401(k) Plan is the only way you can guarantee your plan will remain in full IRS compliance and that you will not be engaging in any plan activities not approved by the Plan or the IRS.

To learn more about the importance of selecting the right solo 401(k) plan provider, please contact a retirement tax expert at 800-472-0646.  Be sure to follow us on Twitter and like us on Facebook!

Feb 27

Why Choose a Solo 401k Over a SEP IRA

A Solo 401(k) Plan is an IRS approved retirement plan, which is suited for business owners who do not have any employees, other than themselves and perhaps their spouse. The “one-participant 401(k) Plan” or Individual 401(k) Plan is not a new type of plan. It is a traditional 401(k) Plan covering only one employee.  Like a SEP IRA, a Solo 401(k) Plan offers the plan participant the ability to contribute up to $57,500 each year.  Before the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) became effective in 2002, there was no compelling reason for an owner-only business to establish a Solo 401(k) Plan because the business owner could generally receive the same benefits by adopting a profit sharing plan or a SEP IRA.  After 2002, EGTRRA paved the way for an owner-only business to put more money aside for retirement and to operate a more cost-effective retirement plan than a SEP IRA or 401(k) Plan.

Solo 401k Advantages over a SEP IRAThere are a number of options that are specific to Solo 401(k) Plans that make the Solo 401(k) Plan a far more attractive retirement option for a self-employed individual than a SEP IRA.

1. Reach your Maximum Contribution Amount Quicker: A Solo 401(k) Plan includes both an employee and profit sharing contribution option, whereas, a SEP IRA is purely a profit sharing plan.

Under the 2014 Solo 401(k) contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $17,500. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $52,000, an increase of $1,000 from 2013.

For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $23,000. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $57,500, an increase of $1,000 from 2013.

Whereas, a SEP IRA would only allows for a profit sharing contribution.  Hence, a participant in a SEP IRA would be limited to 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum of $52,000 for 2014. No employee deferral exists for a SEP IRA.

For example, Joe, who is 60 years old, owns 100% of an S Corporation with no full time employees.  Joe earned $100,000 in self-employment W-2 wages for 2014.  If Joe had a Solo 401(k) Plan established for 2014, Joe would be able to defer approximately $48,000 for 2014 (a $23,000 employee deferral, which could be pre-tax or Roth, and 25% of his compensation giving him $48,000 for the year).   Whereas, if Joe established a SEP IRA, Joe would only be able to defer approximately $25,000 (25% if his compensation) for 2014.

2. No catch-up Contributions: With a Solo 401(k) Plan you can make a contribution of up to $52,000 to the plan each tax year ($57,500 if the participant is over the age of 50).  However, with a SEP IRA, the maximum amount that can be deferred is $52,000 since a SEP IRA does not offer any catch-up contributions.

3. No Roth Feature: A Solo 401(k) plan can be made in pre-tax or Roth (after-tax) format.  Whereas, in the case of a SEP IRA, contributions can only be made in pre-tax format.  In addition, a contribution of $17,500 ($23,00, if the plan participant is over the age of 50) can be made to a Solo 401(k) Roth account.

4. Tax-Free Loan Option: With a Solo 401(k) Plan you can borrow up to $50,000 or 50% of your account value, whichever is less.  The loan can be used for any purpose.  With a SEP IRA, the IRA holder is not permitted to borrow even $1 dollar from the IRA without triggering a prohibited transaction.

5. Use Nonrecourse Leverage and Pay No Tax: With a Solo 401(k) Plan, you can make a real estate investment using nonrecourse funds without triggering the Unrelated Debt Financed Income Rules and the Unrelated Business Taxable Income (UBTI or UBIT) tax (IRC 514).  However, the nonrecourse leverage exception found in IRC 514 is only applicable to 401(k) qualified retirement plans and does not apply to IRAs. In other words, using a Self-Directed SEP IRA to make a real estate investment (Self-Directed Real Estate IRA) involving nonrecourse financing would trigger the UBTI tax.

6. Open the Account at Any Local Bank: With a Solo 401(k) Plan, the 401(k) bank account can be opened at any local bank or trust company.  However, in the case of a SEP or a Self-Directed IRA, a special IRA custodian is required to hold the IRA funds.

7. No Need for the Cost of an LLC: With a Solo 401(k) Plan, the plan itself can make real estate and other investments without the need for an LLC, which, depending on the state of formation, could prove costly. Since a 401(k) plan is a trust, the trustee on behalf of the trust can take title to a real estate asset without the need for an LLC.

8. Better Creditor Protection: In general, a Solo 401(k) Plan offers greater creditor protection than a SEP IRA.  The 2005 Bankruptcy Act generally protects all 401(k) Plan assets from creditor attack in a bankruptcy proceeding.  In addition, most states offer greater creditor protection to a Solo 401(k) qualified retirement plan than a SEP IRA outside of bankruptcy.

The Solo 401k plan is unique and so popular because it is designed explicitly for small, owner-only businesses.  The many features of the Solo 401(k) plan discussed above are why the Solo 401(k) Plan or Individual 401(k) Plan is so appealing and popular among self-employed business owners.

To learn more about the benefits of a Solo 401(k) Plan vs. a SEP IRA, please contact a tax professional from the IRA Financial Group at 800-472-0646.

Feb 25

Hot to Succeed in Saving for Retirement

Hopefully, everyone knows how important it is to save for retirement.  There are many ways available to do this.  The most common is the employer-sponsored 401(k) plan.  If your job offers a plan, you should be investing in it.  If not, there are other alternatives such as an individual retirement account (IRA).  Further, if you have any self-employment incomes, such as from freelance work, contracting or a side business, you can look to fund a Solo 401(k) plan.  No matter your options, it’s important to follow some basic guidelines to investing.

When saving for retirement, do so effectively or pay the priceFirst and foremost is to invest as much and as early as you can.  If you were automatically enrolled in a plan, you’re probably only save 3-4% of your annual earnings.  That’s not nearly enough to retire on.  Try to get that percentage to double digits as soon as you can.  Plus, the earlier you start saving, the more compounding will help your nest egg.  Investing a smaller amount right now and letting it grow will serve you better than a lump sum 20 years down the line.  As we’ve seen over the last decade, the stock market is a roller coaster of a journey.  The more time you have to save, the less the monthly/yearly swings of the markets will effect your savings.  Over the long haul, you will see gains, so don’t worry too much about the fluctuations of the market.

In conjunction with that is to make a plan and stick to it.  Trying to time the market (buy low and sell high) is not something even professionals succeed at too often.  In time, you will see nice returns on your investments.  The one thing you should do at least annually is rebalance your portfolio.  Your asset allocations will fluctuate with the market.  With this, you might be putting yourself at a higher (or lower) level of risk you’re comfortable with.  This move will also give you a better chance of selling high and buying low.

Next, be sure to take into account the fees associated with your plan.  Index funds are a great way to keep fees to a minimum.  You might think a few hundred bucks a year doesn’t matter all that much, but multiply that by 40 years and you’ll look at those small percentages a little differently.  If your plan looks like it costs too much to run, speak to a representative to see how you can lower those fees.

Speaking of index funds, they have several advantages over actively managed funds.  As stated, they are usually less expensive.  They typically outperform the latter as well.  Plus, they have low turnover which is great for taxable accounts.  Lastly, they’ll help keep your investments in line with your overall savings goal.

Lastly, if you are self-employed you may not even have a retirement plan.  A Solo 401(k) lets you save for retirement and choose the investments you want to make.  The Solo 401(k) offered from the IRA Financial Group will let you invest your money any way you choose.  We aren’t looking to sell you on a product, but we can help guide you to make sound investments.  You may not know that you can invest in other things other than the typical stocks, bonds and mutual funds.  You may flip homes or rent out real estate properties, invest in small businesses and even hold precious metals in the plan.

Different retirement plans offer different advantages.  Find out the best one for you and start saving for retirement.  The tax experts at the IRA Financial Group can help you out.  Contact them at 800.472.0646 or visit their website today!

Feb 24

IRA Financial Group Introduces One-Day Set-Up Solo 401(k) Plan Solution for Sole Proprietors

Individual 401(k) Plan solution can be set-up in one day and accept direct rollovers from former employer retirement plan tax-free and penalty-free.

IRA Financial Group, the leading provider of self-directed retirement plans, announces the introduction of the one-day set-up solo 401k plan solution” for sole proprietors and small businesses owners. The one-day solo plan set-up will allow plan participants to rollover former employer retirement funds as well as IRA funds to a self-directed retirement plan tax-free and penalty-free. The one-day set-up plan solution is designed specifically for individuals who have left their former employer in order to establish their own business and wish to rollover the retirement funds into a new retirement plan without delay. “The one-day solo 401(k) plan set-up program is perfect for retirement investors looking to get quick access to their retirement funds to make investments, such as real estate, quickly and without custodian consent,” stated Susan Glass, a retirement tax specialist with the IRA Financial Group. “IRA Financial group’s self-directed plan will allow plan participants make traditional as well as non-traditional investments, such as real estate with the retirement funds as well as borrow up to $50,000 tax-free for personal or business use,” stated Ms. Glass.

IRA Financial Group Introduces One-Day Set-Up Solo 401(k) Plan Solution for Sole ProprietorsIRA Financial Group’s self-directed solo 401K Plan is a cost effective retirement plan that was designed specifically for the self-employed or the small business owner with no employees. IRA Financial group’s solo 401K plan, also called the individual 401K or self-directed retirement plan is a retirement plan designed to maximize contributions and be less complex and less expensive to maintain than a conventional qualified retirement Plan. With IRA Financial Group’s plan, a participant can make high contributions – up to $57,500 – borrow $50,000 or 50% of his or her account value, and make real estate and other investments tax-free and without custodian consent.

With IRA Financial Group’s one-day set-up solo 401(k) plan solution, as trustee of the plan, the plan participant will have the ability to make traditional (stocks, mutual funds, etc) as well as non-traditional investments (real estate, precious metals, tax liens, private businesses, etc) tax free and without requiring the custodian consent. Furthermore, IRA Financial Group’s solo plan account can be opened at any local bank or credit union.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading solo 401k plan provider. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Feb 21

Can a Sole Proprietor Have a 401k?

The Solo 401(k) Plan, also known as the individual 401(k) plan or self-employed plan was designed specifically for a person with self-employment income who is a sole proprietor or a small business owner with no full-time employees..

The Solo 401(k) plan, also called the “one-participant 401(k) plan”, is not a new type of plan. It is a traditional 401(k) plan covering only one employee. The plans have the same rules and requirements as any other 401(k) plan. The surging interest in these plans is a result of the EGTRRA tax law change that became effective in 2002. The law changed how salary deferral contributions are treated when calculating the maximum deduction limits for contributions to a 401(k) plan. This change created an opportunity for some people to put away additional amounts toward their retirement. The marketing for this type of plan is aimed at business owners who do not have any employees, other than themselves and perhaps their spouse.

Solo 401(k) Plan for sole proprietorship business

Solo 401(k) Plan for sole proprietorship business

A business owner with no common-law employees does not need to perform nondiscrimination testing for the plan, since there are no employees who could have received disparate benefits.

The no-testing advantage vanishes if the employer hires employees. No matter what the 401(k) plan is called by a plan provider, it must meet the rules of the Internal Revenue Code. If employees are hired and they meet the eligibility requirements of the plan and the Code, they must be included in the plan and their elective deferrals will be subject to nondiscrimination testing (unless the 401(k) plan is a safe harbor plan or other plan exempt from testing).

A one-participant 401(k) plan is generally required to file an annual report on Form 5500-EZ if it has $250,000 or more in assets at the end of the year. A one-participant plan with fewer assets may be exempt from the annual filing requirement.

With IRA Financial Group’s self-directed solo 401(k) Plan, also known as an individual 401(k) plan, is a specially customized retirement plan, which offers strong retirement benefits and diversified investment options.  With IRA Financial Group’s self-directed 401(k) plan, a self-employed individual, such as a sole proprietor, has the ability to make annual contributions of up to $52,000 ($57,500 for those over the age of 50) for 2014, borrow up to $50,000, as well as use his or her retirement funds to make almost any type of investment on their own, including real estate, tax-deferred (tax-free in the case of a Roth solo 401(k)) without requiring the consent of any custodian.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading provider of self-directed solo 401(k) plans for sole proprietors. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at www.irafinancialgroup.com or call 800-472-0646.

Feb 20

My Solo 401K Plan Loan Rules

One of the more popular options of a solo 401(k) Plan is the loan feature.  Unlike an IRA which does not offer a loan feature, with a solo 401(k) Plan, an individual has the opportunity to borrow money from his or her solo 401k plan without any penalty or tax.

One of the more popular options of a solo 401(k) Plan is the loan feature. The Solo 401k allows participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose at a low interest rate (the lowest interest rate is Prime which is 3.25% as of February 12, 2014). This offers a solo 401(k) Plan participant the ability to access up to $50,000 for use for any purpose, including paying personal debt or funding a business.

As long as the plan documents allow for it & the proper loan documents are prepared and executed, a participant loan can be made for any reason. The solo 401k loan is received tax-free and penalty free. There are no penalties or taxes due provided loan payments are paid on time. The IRA Financial Group solo 401(k) Plan documents will allow you to use a loan from your solo 401(k) for any investment purposes, including real estate, funding your business or a new business, tax liens, private placements, etc.

The ability to borrow tax-free and penalty from a solo 401(k) plan  make the Solo 401(k) plan the most popular retirement plan for the self-employed.  To learn about the advantages of adopting a solo 401(k) plan, please contact a retirement tax professional at 800-472-0646

Feb 18

Back to Basics – Comparing the 401k to an IRA

Both 401(k) plans and individual retirement accounts (IRAs) allow you to set aside money for retirement with tax advantages.  Both types of plans allow for either pre-tax funding (traditional accounts) or after-tax funding (Roth accounts).  Traditional plans offer an immediate tax break; taxes aren’t paid until you withdraw the money.  Roth accounts don’t offer the immediate tax break, however withdrawals are tax-free during retirement.  As the name implies, IRAs are personal accounts while 401(k) plans are typically employer-sponsored plans.

Both types of plans are known as defined contribution plans.  The amounts eligible for each account are defined by IRS guidelines.  Employer-sponsored 401(k) plans have additional rules are well.  For example, employers may opt to offer a contribution match to encourage employees to participate in the plan.  Money is invested through the plan and earnings are not taxed until withdrawal.  However, earnings are not guaranteed; they depend on the success of the investments chosen.

The difference between 401(k) plans and IRAs.Next, are contribution limits.  Each type of plan has a maximum you can contribute to it each year.  For IRAs, the max you can contribute for 2014 is $5,500.  If you are at least age 50, you may contribute an additional $1,000 in a catch-up contribution.  This max is the same for a Roth IRA as well.  For 401(k) plans, you may contribute up to $17,5000 for this year plus an additional $5,500 if you are age 50+.  This is the same amount for Roth 401(k) plans.  Note: if you receive an employer match for your 401(k), that amount goes toward your max contribution for the year.

As far as distributions go, traditional plans follow the same rules.  You cannot withdraw from your account before age 59 1/2 without incurring a 10% early withdrawal penalty (this penalty is waived for only certain hardship withdrawals).  Further, once you reach age 70 1/2, you must start taking required minimum distributions (RMDs) from your account.  Failure to withdraw the required amount each year will lead to stiff penalties.  Roth plans have no RMDs since taxes were already paid prior to investing in the plan.

Lastly, as far as investments go, you are usually limited to what your employer-sponsored 401(k) plan offers or in the case of an IRA, what your custodian allows.  Typically, these include stocks, bonds, mutual funds or annuities.  If you are looking to invest in non-traditional investments, you can opt for a self-directed IRA or, if you have self-employment earnings, you can look at a Solo 401(k) plan.

The IRA Financial Group is the country’s leading provider of retirement planners looking at alternative investments.  With “checkbook control” accounts, you don’t need to ask your custodian’s permission to make an investment.  For more information about retirement options, please contact a retirement specialist now @ 800.472.0646 or visit our website today!

Feb 15

A Little About the Roth Solo 401k

The Roth Solo 401K Plan is the ultimate tax-free retirement solution for the self-employed. With federal and state income tax rates expected to increase in the future, gaining the ability to generate tax-free returns from your retirement investments when you retire is the last surviving legal tax shelter. With a Roth Solo 401K you can make almost any investment tax-free, including real estate, tax liens, precious metals, currencies, options, and private business investments and once you hit the age of 59 1/2 you will be able to live off your Roth 401K assets without ever paying tax. Imagine if someone told you that if you started making Roth 401K contributions in your forties and by just generating a modest rate of return, you could have over a million dollars tax-free when you retire. With a Roth 401K, live off the Roth 401K investment income tax-free or take a portion of your Roth 401K funds and use it for any purpose without ever paying tax.

The Roth Solo 401K Plan Advantages

High Contributions: A Roth Solo 401(k) combines features of the traditional 401(k) with those of the Roth IRA. Like a Solo 401K Plan, the Roth Solo 401K Plan is perfect for any self-employed individual or small business owner with no employees. The Roth Solo 401K Plan contains the same advantages of a Solo 401(k) Plan, but as with a Roth IRA, contributions are made with after-tax dollars. While you don’t get an upfront tax-deduction, the Roth 401K account grows tax-free, and withdrawals taken during retirement aren’t subject to income tax, provided you’re at least 59 1/2 and you’ve held the account for five years or more.

The Roth Solo 401(k) can offer advantages to self-employed individuals who wish to maximize their ability to generate tax-free retirement savings while receiving the ability to invest in real estate, precious metals, private businesses or funds tax-free and without custodian consent.

The Roth Solo 401K Plan is the ultimate tax-free retirement solution for the self-employed.Unlike a Roth IRA, which limits individual Roth IRA contributions to $5,500 annually ($6,500 if the individual is 50 years or older), in 2014, with a Roth Solo 401(k) account, an individual can make Roth (after-tax) contributions of up to $17,500, or $23,000 for those 50 or older by the end of the year — allowing individuals to stock away thousands of dollars more in tax-free retirement income than they would through a Roth IRA.

A Roth Solo 401(k) is perfect for sole proprietors, small businesses and independent contractors such as consultants. The Roth Solo 401(k) plan is unique and so popular because it is considered the last remaining legal tax shelter available. There are so many features of the Roth Solo 401(k) plan that make it so appealing and popular among self-employed business owners.

Unlimited Investment Opportunities: With a Roth 401(k) Plan or Roth 401(k) plan sub-account, you can invest your after-tax Roth 401(k) Plan funds in real estate, precious metals, tax liens, private business investments, and much more tax-free! Unlike with a pre-tax 401(k) Plan, with a Roth 401(k) account, all income and gains would flow back tax-free to your account. As long as you have reached the age of 59 1/2 and have had the Roth 401(k) account opened at least five years, you can take Roth 401(k) Plan distributions tax-free. In other words, you can live off your Roth 401(k) Plan assets or income tax-free. With federal income tax rates expected increase, the ability to have a tax-free source of income upon retirement may be the difference between retiring early or not.

Loan Feature: While an IRA offers no participant loan feature, the Roth Solo 401k allows participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose at a low interest rate (the lowest interest rate is Prime which is 3.25% as of February 1, 2014). This offers a Roth Solo 401(k) Plan participant the ability to access up to $50,000 to use for any purpose, including paying personal debt or funding a business.

Offset the Cost of Your Plan with a Tax Deduction: By paying for your Solo 401(k) with business funds, you would be eligible to claim a deduction for the cost of the plan, including annual maintenance fees. The deduction for the cost associated with the Solo 401(k) Plan and ongoing maintenance will help reduce your business’s income tax liability, which will in-turn offset the cost of adopting a self-directed Solo 401(k) Plan. The retirement tax professionals at the IRA Financial Group will help you take advantage of the available business tax deduction for adopting a Solo 401(k) Plan.

Cost Effective Administration: In general, the Roth solo 401(k) plan is easy to operate. There is generally no annual filing requirement unless your solo 401(k) plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ).

Exemption from UDFI: When an IRA buys real estate that is leveraged with mortgage financing, it creates Unrelated Debt Financed Income (“UDFI”) – a type of Unrelated Business Taxable Income (also known as “UBTI or UBT”) on which taxes must be paid. The UBTI tax is approximately 35%. Whereas, with a Roth Solo 401(k) plan, you can use leverage without being subject to the UDFI rules and UBTI tax. This exemption provides significant tax advantages for using a Roth Solo 401(k) Plan versus an IRA to purchase real estate.

To learn more about the Roth Solo 401(k) Plan, please contact a 401(k) expert from the IRA Financial Group at 800-472-0646.