Elizabeth Brokamp, a Motley Fool contributor (and wife to
the retirement guru on MF, Robert Brokamp) recently did an article on setting
up a solo 401k that I thought was worth sharing here with our new self-directed
retirement readers. It has been recommended a number of times and offers some
of the basics you need to know.
The four nuggets that stood out for me:
* It offers the chance for more tax-sheltered
retirement money than other types of plans for self-employed folks. Currently,
you can set aside up to $15,500 in contributions, plus 25% of your yearly
business revenue if you’re incorporated (20% if you’re a sole Proprietor), with
the cap set at $45,000 in 2007.
If you’re an employee and contribute to your employer’s 401(k) plan but have a
sideline business, you may still be eligible. [This is clutch, to me – for our
clients and friends who work elsewhere, but moonlight…]
If your plan administrator allows it, you may borrow up to 50% of the money in
the account as long as it’s paid back within five years with interest. [The
very same question yours truly had a few posts ago…]
All plans are not created equal. You’ll want to compare retirement plan
provider fees, administrative costs, and investment choices to ensure you get
the best deal.
can read the full post here:
For those interested, Robert Brokamp’s Rule Your Retirement
newsletter has a free trial subscription. If you are unfamiliar with Motley Fool, you
will want to just check out their main site as well. It is well respected,
trusted, and places like the Economist have said great and strong things about
it. “”(The Motley Fool) stands out as an ethical oasis in an area that is
fast becoming a home to charlatans.” — The Economist
link is for the free newsletter trial, but the obvious domain of motleyfool.com
or fool.com will get you to the main page.
Please come and share your story about investing out of your
solo 401k at our site: www.unretiredboomer.com.
We plan to highlight some of the best stories and strategies here in our
AllBusiness.com Self Directed Retirement blog.