A solo 401k plan can be tailor-made to fit any small business owners’ needs, such as those for contractors and real estate agents. Local banks or consultants can no longer limit your needs. You also feel more in control when it comes to your checkbook and can invest in anything allowed by the law.

There are many experienced professionals that can assist you when it comes to your solo 401k. Taking advantage of these professionals is the first step when making this decision. You will have complete control over your retirement funds as well as by- pass any custodial fees for transactions. Having the highest contribution limits of any other 401k plan that is offered is another big plus. There are also no early withdrawal penalties and minimal taxes.

Basically, the solo 401k plan is the single businessperson’s retirement plan. The solo 401k can be accessed by the business owner as well as other employees related to the owner. Once other non-relative employees are added to the payroll-the rules change and the solo 401k may not be available.

Going to a financial planning firm or an individual financial planner is the best way to establish a solo 401k. Establishing a trustee for your 401k account can save a business owner a lot headaches and time. There are some sole business owners who want to take on that responsibility themselves and it may seem like an easy task, but maintaining meticulous records can often land some owners in trouble with the government for overlooking certain items.

Another nice benefit for acquiring a solo 401k plan is the allowance of higher contributions compared to other retirement plans. While even making less money, it is possible for participants to contribute more to a solo 401k than they would with IRA accounts. A big difference from regular employer directed accounts, and in addition to the larger contribution rate, the loan allowance is 50,000 or up to 50% of the total amount.

But remember, solo accounts aren’t completely free and clear of taxes. Contributions are tax deductible, the earnings received are deferred until the money is taken out. Withdrawals are always taxed. There are a few set limits placed on specific contributions, such as; only up to twenty percent of your individual income can be contributed. This number can change every year.

The solo 401k account is a fairly new invention and with the arrival of small and one person business owners may have caused the tax laws to change. Freedom associated with a solo 401k affords business owners to contribute a lot of their earnings to a savings plan. Solo 401k plans are definitely paying off for them in terms of higher contributions and earnings as they enjoy these benefits.

Granted, if a sole business owner obtains an employee, his or her solo 401k plan will be null and void. He or she will then have to adopt a 401k plan. This will change the outlook of retirement and benefits drastically. Continue to be mindful of the laws associated with the solo 401k plan as your prepare for your future retirement.