Solo 401k also known as individual 401k, self-employed 401k is a type retirement plan made specifically for self-employed individuals and business owners who has no full-time employees working on it. In this plan, both the employer and employee are eligible to make contributions. Also, it differs from other retirement plans because it does follow the rules and regulations of other IRA’s. It does not subject the ERISA but all employees and employers can receive the same tax benefits as other retirement plans.

Eligibility
The basic eligibility level of the employee who wishes to open a self-directed IRA account is listed below:
1. Except for full-time employees, all others are qualified in this plan. A full-time worker is referred to an employee who has worked more than 1000 hours in a year.
2. Employees who are less than 21 years of age are not eligible for this retirement plan.
A solo 401k plan can be opened by any self-employed business, sole proprietorship, partnership, corporation etc.

Contribution limit
In some ways, a self-directed IRA is like a traditional IRA or a Roth IRA. The account is designed to provide tax advantages, and participants must follow the same eligibility requirements and contribution limits. The maximum contribution limit for 2019 is $6,000, or $7,000 if you’re age 50 or older. You’ll be able to start withdrawing funds when you are 59 1/2 years old. The elective deferral can be made up to 100 percent of compensation but not exceeds annual contribution limit. If making contribution in the name of employer, a 25 percent of compensation can be made.

How to Setup a Solo 401k Plan?
Nowadays setting up a retirement investment account is much easy as possible. An eligible investor can open an account using local custodians. But be sure you are working with a professional custodian. Sprout IRA is one among the retirement investment account provider companies can instantly set up a Solo 401k account. With set up, they can help to manage the account as simple as possible. To know more details about the company and contributions in the solo 401k account, visit their website at https://sproutira.com/

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