CamaPlan Self-Directed 401(k) Plans
An Individual(k) is one of the types of retirement plans available specifically to small business owners and the self-employed. This plan goes by other names such as:
- Solo 401(k)
- One Participant K
The Individual 401(k) is a good option for sole proprietors who have no employees other than their spouse or a business partner. The Economic Growth and Tax Relief Reconciliation Act of 2001 made changes to Individual(k) contribution limits, allowing it to function as a regular 401(k) plan combined with a profit-sharing plan. This type of 401(k) plan can have significant advantages over other retirement plans for small businesses, as long as there are no employees beyond the owner and their spouse. Your individual 401(k) plan can grow even faster when you open your account at CamaPlan. We offer self-directed retirement plans that put investors in the driver’s seat. You are free to invest in a wide variety of alternative assets, including real estate, gold and silver, mortgage notes, loans, and many other types of assets not prohibited by IRS regulations. CamaPlan is a leader in the self-directed IRA, real estate IRA, and other retirement plans for individuals and small business owners. Call us today to discover how a self-directed Individual(k) will empower you to make the high-yield investments that will secure your future.
The Highest Contribution Limits Among Small Business Retirement Programs
What makes the solo 401(k) so appealing among the many small business retirement account options is that it has the highest potential contribution limits of all IRAs and 401(k) accounts. Individual(k) limits combine the maximum contributions available for 401(k) plans plus up to 25% of the employee’s income made as a tax-deductible contribution from the business as a form of profit sharing plan. As the owner of the business or a self-employed individual, you make contributions in the role of both employee and employer. For most people, this will result in a higher possible total contribution than for a SEP IRA or a SIMPLE IRA.
Participants have the option of making tax-deferred 401(k) contributions, post-tax Roth 401(k) contributions, or a combination of both. Earnings on investments grow tax-deferred and are subject to income tax when withdrawn if the salary is put into a tax-deferred account. Elective salary contributions made to a Roth individual 401(k) plans are generally tax-free when withdrawn as qualified distributions, much as they are for a Roth IRA. An Individual(k) calculator can help you determine what your likely contribution maximum will be based on your income.
The Individual(k) has several other advantageous features.
- A Custodian or Administrator is not required
- Personal loans are available
- You can invest in life insurance
- Unrelated Debt Financed Income is not usually applied to Individual 401(k) plans
- Bankruptcy Protection
- In many states, depending on the plan set up, there is protection from creditors
Depending on your Individual 401(k) plan document, you may be able to borrow funds from your Individual 401(k) plan for certain qualifying expenses. There are categories of hardship designations & education costs set by the IRS that may be eligible for penalty-free early withdrawal. Additionally, Individual(k) plans generally have lower administrative costs than a regular 401(k). CamaPlan offers three levels of support for your self-directed 401(k) plan:
- CamaPlan Full-Service Self-Directed Individual(k) Plan: Our Account Specialists produce the required solo 401(k) plan document and also provide all recordkeeping services for participants’ self-directed investments.
- CamaPlan DYO Self-Directed Individual(k) Plan: We provide the required plan documents. The owner performs all recordkeeping tasks for the investment(s).
- CamaPlan Outsourced Administration Services: For business owners who have approved plan documents establishing another tax-deferred savings plan, such as a Traditional 401(k), Roth 401(k) plan, Profit Sharing Plans, Employer Stock Ownership Plans, and others, CamaPlan provides expert recordkeeping services for self-directed investments.
Consult with a CPA or investment adviser to determine the best retirement savings account structure for your particular situation and requirements, then contact CamaPlan at 866-559-4430 to open your account.
When Might a Different Account Be Better?
You may be wondering: “Is there is any reason not to choose an individual 401(k) plan?” There is no one-size-fits-all answer to saving for retirement, so yes, there can be reasons why small business owners might opt for other self-directed retirement accounts. If you hire an employee other than your spouse or business partner, you lose the special advantages of an Individual 401(k) and will essentially end up with a standard 401(k) plan. In that instance, a SEP IRA might be more appropriate; consult your financial adviser to discuss your specific situation. While CamaPlan makes it easy to manage your Individual(k) plan, as with any 401(k), there is more paperwork required than for an individual retirement account. If your business is just getting off the ground and you are unlikely to take advantage of the high salary and profit-sharing Individual(k) limits, you might be better off with a plan that is less time consuming and expensive to administer, such as a SIMPLE IRA. Keep in mind that you have the option to roll over funds from most types of retirement accounts into an Individual 401(k) plan at a later time (please note that there is a two year waiting period for rolling over funds from a SIMPLE IRA). As your circumstances change, it might be time for a new direction; IRA and 401(k) plans all have their own unique features and benefits. Let a CamaPlan retirement specialist provide you with our ultimate guide to retirement planning and answer all of your questions about options for retirement self-directed investments. Call us today to get started.
Build Wealth Your Way
As a business owner, you make the decisions about how to grow your company and make it successful. At CamaPlan, we believe that investors should have the same level of control over their personal finances. From a Traditional IRA to a myriad of retirement accounts for small businesses, the investments in every CamaPlan account are controlled by the individual account owner. Why should you be limited to the narrow variety of stocks, bonds, and mutual funds offered by most brokerage houses when there is such a diverse range of investment opportunities available? Our role at CamaPlan is to handle the required IRS reporting and provide you with the investor education that will empower you to take charge of your own finances. Call us today to open a CamaPlan Individual(k), and build your wealth your way.