STEP 4: START USING
Once your Solo 401k is set up, you have many options for using it:
Transferring in any existing retirement funds, if desired
If you have an existing IRA or 401k from a previous employer, transferring your funds into the new Solo 401k and getting checkbook control of those assets is easy. For more information on what you may be able to rollover into the plan, feel free to give us a call.
Making new contributions to the plan
One of the huge benefits to the Solo 401k is the ability to contribute a large amount of tax-advantaged funds into the plan each year. People are sometimes amazed to learn the contribution limits are roughly 10 times higher than that of an IRA. With our plans, there is a built-in Roth component, so you can make Roth contributions that will grow tax free, traditional contributions that are tax-deductible, or a combination of both. You can even make after-tax (non-Roth) contributions and convert those funds to Roth. This is sometimes referred to as the mega backdoor Roth strategy.
Borrowing funds from the plan via a participant loan
Unlike an IRA, our Solo 401k allows you to take a loan from your retirement account, up to $50,000 per participant. There is no fee for this service, and you don’t have to pay interest to a bank. Interestingly enough, the borrowed funds are not even subject to the prohibited transaction rules that govern these retirement accounts.
Investing the funds into both traditional and alternative assets using checkbook control
Our plans are designed for you to have checkbook control and the flexibility to invest into alternative assets such as real estate, cryptocurrency, notes, precious metals, private companies, etc. On top of that, you can still allocate funds to more traditional assets such as stocks, bonds, and mutual funds if you wish. You’re not trading one set of restrictions for another. You really do get the best of both worlds with this incredibly powerful, fully functional retirement plan.