Self-Directed Solo 401(k) 

Access the Ultimate Guide to the Self-Directed Solo 401(k): try.trustetc.com/self-directe...
In this session, you'll learn about:
- Self-Directed Solo 401ks and Your Investment Options
- Contributing to a Solo 401k and the Contribution Limits
- Solo 401k Eligibility
- Solo 401k Rules and Regulations
- Potential Advantages of a Solo 401k
- Roth Solo 401k
Equity Trust Retail Sales Manager, John Bowens, answers common questions about Solo 401ks such as:
Q: What is a Solo 401(k)?
A. A self-employed individual may be eligible to establish a solo 401(k), assuming you have no active employees for your business.
Q: How much can you potentially contribute to a Solo 401(k)?
A: So you wear two hats as a contributor, your employee hat and your employer hat. The employee side, under the age of 50, you can contribute up to $19,000 for a solo 401k. When you're 50 and over (2019 tax year) you can contribute up to $25,000.
The employer deferral: You can defer up to 20% of your self-employment income. If you're paying yourself through a W-2, 25% of your income.
The total amount you can contribute, when under the age of 50 cannot exceed $56,000. When you're over the age of 50 you cannot exceed $62,000.
The really great thing, is that you can make these employee contributions to a Traditional, tax-deductible, bucket, or you can elect to put the employee contribution into a Roth, tax-free, bucket.
Real estate investors have the opportunity to put it into a Roth bucket, so if all the rules are followed, the tax-free profits from a real estate investment don't hit your ordinary income.
You can also take your Traditional bucket and convert it to your Roth component of your Solo 401(k).
Q: What are the key features that attract investors to a Solo 401k?
A: High contributions, specifically the Roth component, allows for higher tax-free contributions.
Let's say we have a business owner of an S-corporation, and they're paying themselves a consistent W-2. No employees, unless it's a spouse.
The investor is paying themselves $100,000, including taxes, and make an employee contribution = $25,000 (over the age of 50).
The great thing is that you can put that into a Roth.
Now, let's contrast that with a Roth IRA. The contribution limits are much lower. With the employee hat on the investor, they can contribute up to 25% of that income -- $25,000.
We can take that $25,000 and convert it into a Roth. We've created $50,000 in Roth cash -- to be used for stocks, bonds, real estate, rehabs, lending money, and a wide variety of alternative assets.
Another key feature as it pertains to investing that money in real estate, is possible UBIT exemption on debt leveraged real estate income.
You have to be eligible to establish and fund a solo 401k. There are a number of individuals that say you don't need to have earned income and that is not true. Team up with your CPA to ensure that you're eligible for one of these Solo 401(k)s.
Equity Trust Company is a passive custodian and does not provide tax,legal or investment advice. Any information communicated by Equity Trust Company is for educational purposes only, and should now be construed as tax, legal or investment advice. Whenever making an investment decision please consult with your tax attorney or financial professional.