PENSCO Helps Investors Open Solo(k) Before Year-End Deadline
Solo(k) Plans Give Small Business Owners More Tax-Advantaged Options than SEP-IRA
SAN FRANCISCO – Small business owners who want additional options for maximizing their contribution to a tax-deferred retirement account should consider opening a Solo(k) before the end of the year, according to PENSCO Trust Company, the alternative asset custodian specializing in complex investments.
The Solo(k) is a tax-deferred retirement plan specifically designed for individual business owners or self-employed persons. Like a SEP-IRA, a Solo(k) allows a maximum of $50,000 in pre-tax contributions, but offers the additional benefits of enabling account owners to make pre-tax or after-tax investments in an S Corporation and life insurance. All investments in a Solo(k) benefit from tax-advantaged growth.
PENSCO's Solo(k) plan offers additional advantages over other Solo(k) programs by allowing account owners to combine four different types of contributions. These include a traditional 401(k), Roth 401(k), employer contributions through a profit sharing plan, and a rollover from another tax-advantaged account, such as an IRA, rollover IRA or defined benefit plan.
In addition to higher contribution limits than a SEP-IRA, PENSCO's Solo(k) plan allows account owners to borrow up to $50,000 or 50% of the balance. SEP-IRA owners cannot borrow against their balance.
"The Solo(k) is one of the least understood options for small business owners, but it is one of the best for maximizing tax-deferred savings," said PENSCO CEO Kelly Rodriques. "In many ways, the Solo(k) plan is a better version of the SEP-IRA. If you're a small business owner, you should consider a Solo(k) before the year-end deadline or talk to your advisor to evaluate the advantages."
A Solo(k) plan must be opened by Dec. 31 or fiscal year-end, whichever comes first. Investments in a Solo(k) can be invested in traditional as well as alternative assets. To learn more about eligibility and restrictions, use PENSCO's IRA comparison tool.