Solo 401K November, 2009 Paul Pergande P.E.
Quotes • Arthur GodfreyI am proud to be paying taxes in the United States. The only thing is I could be just as proud for half of the money. • Dr. Laurence J. PeterAmerica is a land of taxation that was founded to avoid taxation. • Ronald ReaganThe taxpayer: that's someone who works for the federal government, but doesn't have to take a civil service examination.
Quotes • Gerald Barzan Taxation with representation ain't so hot either. • Morgan Stanley You must pay taxes. But there's no law that says you gotta leave a tip. • Ogden Nash The more you earn, the less you keep,And now I lay me down to sleep.I pray the Lord my soul to take,If the tax-collector hasn't got it before I wake.
What is a Solo 401K? • Similar to common corporate 401K • Same basic contribution limits $16.5K, (2009) • Same type of investment options, stocks, mutual funds, precious metals, etc. • Ability to add an additional 20% of income as profit sharing match • Loan Option • Tax deductible • Minor administrative fees ~.25% • Available for ‘part time’ self employed if you are covered by another 401k plan • Other options • Simple IRA • SEP - Simplified Employee Pension Individual Retirement Account (SEP IRA) is a variation of the Individual Retirement Account.
Simple vs. SEP vs. Solo • Solo 401k • Rare due to limited market • Same 401K limits 16.5K • Plus 20% income or 25% of W2 • Catch up of $5.5K over age 50 • Max $49K • Loans • 0.25% Admin fee • Simple • No loans • Aimed at lower income employees • Max $11.5k • Waiting period for eligibility • SEP IRA • Common at many brokerages • Same 401K limits 16.5K • Limited to 20% income • No Catch up for over age 50 • Max $49k • No Loans • No IRS filings
Details • Who offers this product? • 401Kbrokers.com in LaJolla, CA • Not offered directly from Vanguard • 401k Brokers acts as a third party administrator • Direct access to Vanguard no load funds and brokerage services • Fidelity does not offer this investment tool
Resources • http://www.401khelpcenter.com/pdf/Solok_Vendor_List.pdf • http://www.401kbrokers.com/Solo401k.htm • http://www.pensiononline.com/401khelpcenter/netcalc.asp • http://solo401k.com/ • http://www.smartmoney.com/personal-finance/taxes/the-perks-of-the-solo-401k-13505/
Quotes • John Maynard KeynesThe avoidance of taxes is the only intellectual pursuit that carries any reward.