Know What Benefits a Solo 401(k) Plan Have to Offer


The popularity of Solo 401(k) is increasing day-by-day. And that is not without reasons. The plan has a lot of benefits that justify why you should go for one.

Therefore, before choosing a Solo 401(k) provider, it makes sense to know what benefits the plan has to offer. Read on the benefits:

Simple Administration

There is no annual tax filing for any plan that has less than $250,000 in plan assets. However, if your plan exceeds $250,000, you need to fill a simple 2 page IRS Form 5500-EZ.

Roth After-Tax Benefit

One of Solo 401(k) notable benefits is that it can be made in a pre-tax or Roth (after-tax) format. But, contributions can only be made in the pre-tax format with a traditional IRA.

Borrowing Up to $50,000 Tax Free

With a Solo 401(k) plan, you can borrow up to $50,000 or 50% of your account value, whichever is less. You can use the loan can be used for any purpose.

No Need to Establish an LLC

Since a 401(k) plan is a trust, you as the trustee can take the title to a real estate asset on behalf of the trust. And that eliminates the need for creating an LLC.

Protection from Creditors

As the 2005 Bankruptcy Act protects all 401(k) plan assets from creditor attacks in a bankruptcy proceeding, a Solo 401(k) plan offers more excellent creditor protection than a traditional IRA.

Freedom of Choice

With a Solo 401(k), you can make traditional as well as non-traditional investments. As the trustee of the plan, you will have the checkbook control over your assets. You can make investments whenever you want.

The benefits of a Solo 401(k) plan are only the tip of the iceberg. There is a lot to know, and the infographic in this post serves as a guide.

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