The Self-Directed Solo 401k plan is an IRS-approved and qualified 401k plan designed for a self-employed sole proprietor, a corporation, or limited liability company.

The self-employed 401k participant can make contributions as both the employee and the employer resulting in very high contribution limits.

Our team likes to refer to the Self-Directed 401k as a Self-Directed IRA on steroids! This is a very powerful tool with a wealth of benefits!

Self-Directed Solo 401k Benefits

Higher Contributions

  • Annual contributions up to $61,000 with an additional $6,500 catch-up contribution for those over age 50.

Borrow from Your Self-Directed 401k (Tax- And Penalty-free)

  • Borrow up to $50,000 or 50% of your account value (whichever is less) for any purpose. Loans must be paid back within 5 years.

Checkbook Control

  • Plan participants may have the option to have checkbook control over their retirement funds. American IRA acts as the record keeper for the Self-Directed Solo 401k plan.

Roth Provision

  • A built in Roth provision is included which can be contributed to without any income restrictions.

Easy Administration

  • You are the trustee of the plan. American IRA acts as the record keeper.

A Wealth of Investment Options

  • You can invest in real estate, private lending, limited liability companies, precious metals, tax liens, and much more!

Exemption from UDFI

  • With a Self-Directed Solo 401k plan, you can use leverage to purchase real estate, which may be exempt from UDFI rules and UBTI tax.

Consolidate Accounts

  • Most of your other retirement accounts for example: 401k from other employer, SIMPLE IRA, SEP IRA, 403(b), 457(b), and Traditional IRA.
    • Note: Only new Roth contributions are allowed in a Solo 401k, existing Roth funds can’t be transferred or rolled in.

Self-Directed Solo 401k Eligibility

To be eligible to benefit from the wealth of possibilities within a Self-Directed Solo 401k plan, investors must meet two requirements:

  • The presence of self-employment activity.
  • The absence of full-time employees.

Keep in mind if you and/or your spouse are the sole owner(s) of the business both can contribute to their individual accounts within the Self-Directed Solo 401k.

There are certain employees that you can employ which can be excluded from your plan:

  • Employees under the age of 21 years old.
  • Employees who work less than 1,000 hours in any year.
  • Non-resident alien employees with no U.S. income.

Keep in mind that even if you don’t qualify for this plan, we have many other plans that you do qualify for.

Contribution Amounts

The newly released 2022 contribution amounts allow for employee deferral limits of $20,500 per person with catch-up contributions for those 50 and over of $6,500 per person. Annual additions the employer chooses to pay to each person’s account cannot exceed the lesser of:

  • 100% of the employee’s compensation or
  • $61,000

Source of contribution limits:

The Self-Directed Solo 401k Process

Self-Directed Solo 401(k) Process

Learn More…

To learn more about setting up your Self-Directed Solo 401k, please contact our at office 1-866-7500-IRA(472) or [email protected].

If you are an American IRA Client and you have questions regarding the investment process, please contact our office at 1-866-7500-IRA(472) or [email protected].

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