If you are running a small business you should definitely look into getting a Solo 401k. This is a specialized 401k account that is designed for self employed individuals.
Retirement is something that every working individual must consider when they begin to work. You need to have an eye on the future. One of the best ways to ensure that you will be able to meet your retirement needs in the future is by investing in a 401K account.
A 401k account is a pension plan that is tax defined. Many employers provide this facility for their employees and make annual or monthly contributions to the account. However, small businesses that do not have any permanent employees save for the business owner and his or her spouse do not qualify for these accounts. This is where the solo 401k account comes in.
This is a specialized account that caters for self employed individuals. It is also known as the individual 401k plan or self employed 401k plan. To qualify for this type of pension plan, you must earn some income as a self employed individual. This does not mean that your entire income must be from self employment. You don’t have to be self employed on a full time basis. You can have a full time day job and earn the rest of your income from self employment and still qualify for the pension scheme under the solo 401k. However, only that part of your income that is earned from self-employment will be considered for the pension scheme.
It is also important to note that only those businesses that do not have permanent staff qualify for the solo 401k plan. The self employed individual may qualify if their only permanent staff is their spouse. According to the government, the individual will not qualify if they have staffs that work more than 1000 hours per year under them unless they are their spouse. Anyone working more than 1000 hours per year is considered a permanent member of staff.
Anyone who qualifies for the pension scheme will have two basic options. The first option is the brokerage scheme. The brokerage based scheme offers the individual investment in market based assets such as mutual funds as well as stocks.
The second plan is the self-directed scheme. This is a more flexible plan that allows for investment in a wider variety of assets including investing in private businesses as well as real estate.