For the majority of US citizens, retirement savings are their basic requirement, but they don’t save much for the golden years of their life. Based on the findings of the Washington Post, more than 70 percent of US people don’t save much money for their retirement. Another government office stated half of US households, especially seniors 55 years and more have no savings for their retirement.
However, if you are a self-employed individual without any full-time staff, you can opt for a solo 401K, according to an article on Huffington Post. So, with expenses increasing daily, you need to save enough for your golden years.
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You can self-direct
When it comes to a solo 401K, it helps in self-directing your retirement account, implying with a few exclusions, you have the liberty to invest in almost any kind of investment you like. Instead of sticking to other investment plans that are more rigid, you can choose a self-directed 401k plan. Moreover, you invest in something you know about, to say it precisely.
If you would like to be a lender and receive a fixed interest rate using your 401k, you can do so. You may even buy a rental property if you have a liking for real estate. Or you can set up a startup firm in your preferred industry and about which you know. You can try all of these options with a self-engaged 401K plan.
Avail of a personal loan
As far as an IRA is concerned, you will find extremely limited situations to use your funds from a retirement account for personal aspects. Due to such restrictions, using IRA funds to meet your personal needs is not a practical thing to do. However, when you have a 401k, you can opt for a loan of a maximum amount of $50,000 or half of the 401K value, which of these is less and use the money for your personal reasons. If you need more details, visit solo401k.com!
When you take a loan under 401K, it must be in writing employing a member loan note that is compliant. It should also provide for at least quarterly settlements in five years. Then, if you need fast cash access, the 401K option is a better alternative than what is there for IRAs. Therefore, reap the maximum benefits if you are looking for a personal loan.
No need for a third-party custodian
IRA requires you to have a third-party defender while the 401K user can be a single person to be his trustee. The other alternative for self-directing is via a self-engaged IRA, which needs to be handled via a third-party protector. A few clients mentioned that they failed to seal a deal because of the postponements related to the process of dealing with the third-party protector. With solo 401K, you’re the trustee and so have the liberty to make investments or perform transactions, thus removing the cost and postponement of dealing with a custodian.
So, there are some major reasons for using a solo 401K apart from tax savings benefits. Understand 401k and make an informed decision.