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You Are A Sole Proprietor: How About A Solo 401(k)

I am seeing more and more people quit the corporate America lifestyle and venture into becoming their own business owner.  This shape of a business owner can be a freelancer, consultant, or someone who actually starts up a ‘brick and mortar’ operation.    Many of these folks will ask questions about whether they should incorporate their business, which I have discussed in other articles.    Once they become profitable, they often ask which kind of retirement plan would suit them the best.   For someone who is a sole business owner, the Solo 401(k) has been around for about a decade and provides a great alternative to helping maximize your retirement contributions.   Here’s a little history on the Solo 401(k) and how it can be a smart money move for your business. The Solo 401k came about in 2002 after Congress passed Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). EGTRRA added some small paragraphs to the tax code that put ...

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Can I Convert My 401(k) To A Roth 401(k)?

This past week Congress passed the Small Business Jobs Act Of 2010. While there were many interesting parts to the bill including changes to how employee cell phones are viewed and accelerated write offs for business owners, one of the very intriguing parts to the bill is the conversion of your existing 401(k), 403(b), or 457 retirement plan. If your employer has a Roth 401(k) provision, (which if they do not currently you should really complain to your HR or Benefits person) you may be eligible for a potentially good long term tax management idea. Generally your employer must have a Roth 401(k) source in the plan, allow in-service withdrawals, allow rollovers, and have the Roth provision in the plan to be able to take advantage of a conversion. 2010 is an especially meaningful year because no matter what level your income is this year, you can convert some or all of your 401(k) (403(b), 457) over to a Roth ...

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