The payroll and the solo 401(k) need to go side by side. The solo 401(k) plan you choose needs to be implemented by the end of the year. This means that you need to ensure that your payroll company is on board the journeys with you and capable of matching your speed. Even though you don’t need to make start contributing right now, it is best if you start planning.
In this article, we will discuss some important things that you need to remember about solo 401(k) and your payroll company.
What You and Your Payroll Should Know?
The solo 401(k) is one of the most effective tools for business owners who aim to boost their retirement contributions. The eligibility won’t depend on the type of business. Apart from LLCs, corporations, sole proprietors, and partnerships will also be eligible for this plan. However, you need to make sure you’re the only employee. Your spouse will also qualify for the solo 401(k) plan.
You are eligible for up to $62,000 for your retirement plan as per the solo 401(k) plan. The tax implemented on the solo 401(k) will be written off. If you include your spouse in the payroll, you will be able to save $124,000.
On the other hand, if you’re not over the age of 50, the allowed contribution will become slightly lower, where you can contribute a maximum amount of $56,000 per year. The solo 401(k) plan will always help business owners save a significant amount of money for their retirement plan.
Specific Information about Solo 401(k)
You will have multiple options to open as well as fund your solo 401(k) account. But you need to pay close attention while opening and funding your solo 401(k) account. You will be eligible to fund the solo401k account directly from the earnings of your business or any other retirement account. Here are the retirement accounts that you’re eligible to roll over:
- Traditional IRA
- SEP IRA
- SIMPLE IRA
- Profit Sharing
- Thrift Savings Plan
- Money Purchase
- Pension Plan
How Can You Fund Your Solo 401(k) Account?
This is one of the most important things you should know about the solo 401(k) plan. When you contact us, our experts will help you thoroughly so that you can get started with an indirect or direct rollover from your new or existing funding. In addition, we can help you roll over different types of assets into a solo 401(k) plan from a self-directed IRA. As per CNBC, make sure you determine how much you can contribute.
One of the best benefits of a solo 401(k) plan is that you will never face problems taking a loan from your account. This will help you become the owner of your account. Even though you do need to pay a specific amount of money as interest when you take the loan, the feature might come in handy. Remember that you cannot borrow more than 50% of the overall account balance. Remember that the annual funding of the solo 401(k) is super flexible.
These are the important things you should know about Payroll Company and solo 401(k). Don’t forget to contact us if you have any other problems.