Why Opening A Solo 401K Account Is An Excellent Business Decision For Small Business Owners

Starting your own business is a dream come true and it is a growing trend in the United States. Everyone has someone in his or her circle who is working as a consultant, freelancer or self-employed. While working on a business idea is an excellent option, it is equally important to save money for retirement.

Most of the entrepreneurs push the idea of retirement or a retirement fund away because they consider it as an additional expense. The problem with this thinking is that they never actually save anything for their retirement and are forced to continue working in old age. In addition to it, they miss out on the tax saving benefits of solo 401k plan.


https://thriveglobal.com/?p=833619&preview=true
https://thriveglobal.com/?p=833620&preview=true
https://thriveglobal.com/?p=833628&preview=true
https://thriveglobal.com/?p=833634&preview=true
https://thriveglobal.com/?p=833635&preview=true




If you are planning to start your own business, here are 3 reasons why you should select a solo 401k plan.

1. Enjoy Benefits Of A Larger Tax Shelter

Unlike the regular contribution limit of $17,500 in a 401k plan, solo 401k allows business owners to contribute up to $52,000 (additional $5,500 for individuals older than 50 years) under tax-deferred income. It is better than any employer plan in the market as the contributions goes under your name only instead of the participating employees.

2. Save Yourself From Complicated Regulations

With a solo 401k plan, employers do not have to undergo any nondiscrimination testing, which makes these retirement accounts easier to manage. In most of the cases, it hardly takes a few hours to set up a solo 401k account with minimal administration fees. You can choose from a wide variety of solo 401k account administrators available in the market.

3. Solo 401K Retirement Accounts Offer Support For Spouse And Multiple Owners

Do you have a partner in your business? Is your spouse contributing in your business? It is a common trend among individuals to start a business in partnership or involve their spouse in the business. Solo 401k retirement plans offer tax-deferred benefits for multiple owners and spouses. However, you might have to change your retirement plan once you start hiring employees.

A solo 401k can offer sufficient funds towards the end of your retirement. Moreover, you can make employer contributions for 2014 up to April 15, 2014 and employee contributions are open up to December 31, 2014.

Always keep in mind that every large business starts in a single room and grows onto a larger firm with time. However, it never hurts to maintain a solo 401k plan to safeguard your retired life.

Prakash Pandey is an avid blogger with an interest in real estate and finance markets. He is also working as a professional write for Sensefinancial, which deals in solo 401k plans for entrepreneurs.



Article Source: http://EzineArticles.com/8855930