Question: I did get a
question after posting my blog yesterday:
Does this mean I cannot take a loan from my solo 401(k)?
Assuming you qualify, of course you may take
a loan from your solo 401(k). See our
May 30, 2008 post, Solo 401k Loans:
Borrowing from your own solo 401k plan, posted by TJ McCue.
Caution: There are many
other ways to be paid by your solo 401(k) – just do not try fashioning a
payment without professional help. Do
not attempt the trapeze without a net!
Rant: While sorting through
an internet search today, I ran across a lot of claims that a Subchapter S Corporation
would not be allowed to sponsor a solo 401(k) plan. This is simply not true and is an example of
outdated information. Be sure of your
facts and sources before proceeding with planning for your self-directed
Rave: I met with a financial
advisor today that understands the value of expanding his offerings to his
clients. He manages client assets for a
percentage fee rather than a commission on each stock purchase and sale. He understood the value of having another
arrow in his quiver; clients migrate to advisors that think out of the box, have
knowledge and skills others do not and are willing to learn what the client is
looking for. He set up 15 solo 401(k)
plans last year.
Did you know: You can have a
self-directed defined benefit plan with checkbook control? A defined benefit plan, in general terms, is
an actuarial plan that calculates how much you should contribute currently to
allow you to take an amount equivalent to your salary when you retire. This makes for a much larger tax deductible
contribution. The great part of this is
you could diversify your investments through a self-directed plan.
This feels good: If you are
50 or over and have a Schedule C (sole proprietorship) business and your net
income for tax purposes, is $25,000, you could contribute $23,234 to your solo
401(k). That is 93%!
It is nice to get all this off my chest. More next week.