Self-employed professionals and owner-only businesses can make significant contributions towards their retirement through qualified 401k retirement plans. These plans are more or less similar to their traditional 401k counterparts. Solo 401k retirement plan is among one of the most popular options.
What is a Solo 401k retirement plan?
Solo 401k is a qualified retirement plan that targets self-employed individuals and owner-only businesses. It comes in both traditional and Roth format, where the first one allows you to make pre-tax contributions and the latter helps you contribute post-tax dollars to your retirement account.
Read more: 401k Infographics: How does a self-directed Solo 401k work?
Who is eligible to open a Solo 401k retirement plan?
Here is a short video to explain eligibility for opening a Solo 401k account.
The key element is:
- Self-employment activity
- Absence of full-time employees
Solo 401k Contribution Limits for 2017
- Elective deferral limit: $18,000
- Defined contribution limit: $54,000
- Catch-up contributions: $60,000 (for professionals above 50 years)
Read more: Solo 401k Quick Tip Video: Buying a Retirement Investment Property
Written by: Dmitriy Fomichenko