Jeff Brown
speaker
60 appearances
1 recordings
1 series
first heard Jul 2019
last heard Jul 2019
Jeff Brown’s voice in public audio — every appearance, attributed to the second.
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Appearances
Yes, I'm a freelancer and I have one myself.
Solo means what it sounds like.
You have to be working for yourself.
If you have any employees at all other than a spouse, you're not eligible.
But otherwise, it works very much like a corporate 401k, but it's a little simpler to set up and get running.
Yes, you wear two hats when you do this.
You can make a contribution as the employee.
And this year, that can be up to $19,000 or $24,000 if you're 50 or older.
Plus, you can make a contribution as the employer, which is a
fraction of the profits that your little business makes.
So the grand total can be $56,000 this year or $62,000 if you're 50 or older.
It's a lot of money that you put aside, and that money is removed from your taxable income.
So you don't pay income tax on it, just like contributions to a corporate 401k.
Well, I think there are two.
The first one is that you have great flexibility in what you can invest in.
It's much like an IRA or a rollover IRA, where you can select pretty much any product that you want, mutual funds, individual stocks, even things that are a little bit out of the ordinary, like master limited partnerships and royalty trusts and things like that.
And you don't have to go through a lot of hoops to get them approved or anything.
So unlike a corporate plan where you're limited to the investments that are selected by the provider and your employer, which are usually some sort of mainstream stock funds, index funds and things like that, or target date funds, with a solo 401k, you can invest in just about anything you want.
The other big advantage is that you can set it up as a Roth 401k, which is very useful to younger investors or to people who think they'll be in a higher tax bracket after they retire and are eligible to make withdrawals.
The Roth allows you to avoid tax on your withdrawals.
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