What is a
Self-Directed Solo 401(k)?
A Self-Directed Solo 401(k) is a qualified retirement plan that gives you maximum flexibility and freedom to invest for your future. It offers similar tax-advantaged retirement savings as a regular 401(k), but is designed specifically for those who earn income from self-employment and have no full-time employees other than their spouse or business partner. Self-employed individuals can qualify regardless of their business capacity or structure (e.g. sole proprietorship, partnership, LLC, independent contractor, etc.). Here is information about income that does NOT qualify as self-employment income.
Unlike regular 401(k) plans where the investment options are generally limited to stocks, bonds, or mutual funds, a Self-Directed Solo 401(k) allows you to take advantage of investing in alternative assets - such as real estate, limited partnerships, LLCs, precious metals, private loans and more. Click for more information about investment options.
A Self-Directed plan allows you to self-direct the funds in the retirement account when and how you see fit, per Disqualified Person and Prohibited Transaction rules that must be followed.
With Nashional Self-Directed as the plan provider, you have the power to take your own path in your retirement planning. We are devoted to helping business owners and investors achieve their financial goals for retirement through tax-advantaged and diversified opportunities.
Self-Directed Solo 401(k) Eligibility*
To be eligible for a Self-Directed Solo 401(k), you must have both:
Self-employment income as a business owner or a 1099 Independent Contractor, and
Employ no W-2 employees working more than 1,000 hours/year
Having your spouse, business partner(s), or 1099 Independent Contractors working with you is OK and does not negate eligibility.
*Ask us about any potential Control Group issues that might hinder your eligibility.
Nashional Self-Directed Solo 401(k) Plans
have the following tax-advantaged provisions:
Save on taxes and save for retirement by:
Making annual salary deferrals up to $22,500 in 2023 (plus up to an additional $7,500 in catch up contributions if you're age 50 or older) as either a pretax, or designated Roth contribution.
You can also contribute pretax through profit sharing. Sole Proprietors, Partnerships and LLCs can contribute up to 20% of their net earnings from self-employment. S-Corps and C-Corps can contribute up to 25% of their salary from self-employment.
After-tax and Roth contribution types are also allowed.
Total contributions for 2023 cannot exceed $66,000, or $73,500 if you're 50 or older. Neither amount, separate or combined, can exceed your earnings or salary from self-employment. Read our blog post to find the 2022 contribution limits.
Learn the basics for how to calculate your contribution amount here. Please consult with your tax advisor for the final allowable amount.
Estimate your maximum contribution amount for 2022 on our calculator page.
Access your retirement funds and put them in your hands today.
Loans are permissible so that you can borrow up to 50% of your account balance, limited to $50,000, for any reason, tax and penalty free.
It must be paid back within 5 years, (15 years if used to purchase a primary residence,) with interest, which is generally Prime +1%.
Learn more about the loan option.
You can diversify the retirement funds into almost any asset class, such as: stock market-related investments, real estate, certain businesses, foreclosures, land, tax-liens, peer-to-peer lending, precious metals, etc.
You control your trust checking account and have Checkbook Control rather than using a third party custodian. This helps to avoid red tape or delays to use the funds, allowing you to act quickly when investing in, say, real estate.
Investment brokerage accounts managed by an investment advisor can also be used for traditional investments, if you wish.
Is a Self-Directed Solo 401(k) right for you?
Do you have income from self-employment as a one-person business owner, 1099 Independent Contractor, Fix 'n Flipper or Freelancer?
Do you have 0 full-time W-2 employees, other than your spouse or partners, or only employ 1099 independent contractors or part-time W-2 employees working less than 1,000 hours/year?
Do you want the ability to borrow from your retirement account?
Do you want to maximize the amount of income tax that you can defer?
Do you want to have the option to have tax-free money in the account for use in retirement?
Do you want the flexibility to invest your retirement funds in asset classes beyond traditional investments, such as stocks and mutual funds?
Do you want to purchase leveraged real estate in your plan and avoid UDFI (Unrelated Debt Financed Income Tax)?