Money Monday: Solo 401(k)s Advantages for Your Financial Future
Welcome to Money Monday—where we break down important financial topics that can help you and your business thrive. Today, we're diving into the benefits of Solo 401(k)s for self-employed business owners and the advantages of setting up small business retirement accounts for your team.
Let’s get started!
What is a Solo 401(k)?
A Solo 401(k), also known as an Individual 401(k), is a retirement plan specifically designed for self-employed business owners or those who have no full-time employees other than their spouse. It offers an excellent way to save for retirement, combining high contribution limits, flexibility, and powerful tax advantages that can give you a significant edge in building your financial future.
Key Advantages of a Solo 401(k):
1. High Contribution Limits:
One of the major perks of a Solo 401(k) is its generous contribution limits. In 2024, as a self-employed business owner, you can contribute up to $66,000 per year (or $73,500 if you’re 50 or older). This limit combines both employer and employee contributions, allowing you to maximize your retirement savings much more quickly than with traditional IRAs or 401(k)s.
2. Tax Benefits:
You can make contributions on a pre-tax basis, which reduces your taxable income for the year. This means you’re not only saving for your future but also lowering your tax liability today. Alternatively, you can opt for Roth contributions, which are made after taxes, allowing for tax-free withdrawals in retirement. With these dual tax options, you have the flexibility to choose what works best for your current financial situation.
3. Catch-Up Contributions:
If you’re over the age of 50, you can make catch-up contributions, increasing your maximum contribution limit by an additional $7,500, allowing you to accelerate your retirement savings.
4. Control Over Investments:
A Solo 401(k) gives you more control over your investments compared to traditional retirement accounts. You can choose a wide variety of investment options, including stocks, bonds, mutual funds, and more. This flexibility allows you to tailor your portfolio to your risk tolerance and financial goals.
Why Act Now
Setting up a Solo 401(k) or a small business retirement account isn’t just about securing your financial future—it’s about making smart, long-term decisions that will benefit both you and your business.
By planning ahead and establishing these accounts, you’re giving yourself and your employees the tools needed for a secure retirement.
At EVG Solutions, we specialize in helping business owners just like you navigate the process of setting up and managing retirement accounts.
Whether you’re self-employed and ready to start your Solo 401(k) or you’re looking to set up a plan for your business, we’re here to help every step of the way.
Don’t wait to secure your future—contact us today to discuss how we can tailor a retirement plan that works for you and your business.