Throughout your retirement journey, you’ll most likely turn over nearly every single metaphorical rock in search of the plan that makes the most sense for you. Looking over plan after plan, reading through terms after terms, can be extremely exhausting and you often don’t wind up knowing any more than you did before you started. We are all too familiar with this story! That’s why we here at Nia think it’s high time someone cut through all the jargon and explained what all these different accounts and plans mean for you! Now let’s get to the good stuff and talk all things 401k.
In short terms, a 401k is generally regarded as the plan in working-society at large, because it’s the most common and often referenced in conversations about retirement. While a traditional 401k isn’t a plan created with self-employed individuals in mind, there is a 401k that can work for you! This 401k is called a Solo- 401k. Here are some highlights of this plan:
✓ You can make contributions either as an employee or as a business entity.
✓ Catch-up contributions are allowed.
✓ Offers a Solo-401k Roth account.
✓ Allows you to take a loan from your Solo-401k.
Sounds great, right? Now that we’ve looked at some of the features and perks, let’s get into the nitty-gritty and learn a bit more!
For contributions, the limits change year to year, and there is an age component, and the limits differ depending on if you’re contributing as an employee or business entity. For example, in 2023, the limit for individuals (as an employee) over 50 is $22,500, with a catch up allotment of $7,500.
Additionally, there are eligibility requirements to meet. These include, but aren’t limited to, having no full-time employees, other than a spouse, and your business must be producing income.
Phew! Have we covered it all? No, but we’ve talked about a lot! If you walk away from this post having learned more about retirement or a Solo-401k, then I think we should all be very happy. A large part of retirement planning is researching, learning, and identifying the right path forward for you, and helping you along the way is all we want to do here at Nia. If you want to learn more, keep an eye on this page, or go ahead and take the leap and join Nia to get a little bit further along on your journey to retirement!
Source of 401k definition: https://www.irs.gov/retirement-plans/401k-plans
