Mark Kohler, a CPA and attorney, explains five reasons small business owners should consider a solo 401(k): simple setup, high contribution limits, flexibility between Roth and traditional options, self-directed investments, and potential cost savings if you avoid hidden fees.
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Hey, Mark Kohler here, CPA attorney, best selling author, radio show host, all about the American dream. Making money, saving money, helping your business go to the next level. We got to talk about the solo 401k. They're amazing and I want to give you five benefits to a solo 401k. Explain what they're about and wow you. Number one reason why small business owners should consider a solo 401k is because they're easy, they're simple. 15 years ago they didn't even exist. Now I'll get into affordability later. They can be deceptively expensive, I'll come to that. But they're simple and easy. For the average small business owner, you, your spouse, your kids, your business partner, their family members can all participate in the same 401k. Now if you have employees, you got to do the group thing. But if you want that circle of family and business owners to kind of work together in a 401k, they've never been easier. They can all participate in one without the cross testing and the top heavy issues and all that baggage that comes with a group. Think about it, they're amazing. Number two, you can put a ton of money into a 401k. Four times what you could do in a regular roth or traditional IRA. That's $18,500 per person plus matching of up to 55,000. Now I'm not saying I put 55,000 in the 401k. Watch my other video on the sweet spot of where to be on the 401k in your business. But this is a big deal. If you're 50 years old or over, you can even do catch up provisions that take you even to another level. Folks, if you want to put money away for retirement and you can afford to do it in your small business, if you're at that point, there's no better vehicle and that you can get the efficiency with than the 401K. Number three, I love the 401K because you can tailor, make it to your situation and do Roth or traditional contributions. It's kind of like a honeycomb. You can say, well, I'm going to put money in the Roth cell this year because I don't need the tax write offs and I want to get that tax free growth going. Or you can say I need the write off, I'm going to do a traditional contribution plus the match and you get the write off because that's where I need to be this year. So you can pick and choose with your solo 401k. You can tailor, make it to what fits you best from year to year when it comes to tax deductions. Number four. And you knew I was going to say it, you can self direct your 401k, you can invest in what you know best, you can be the trustee of your own 401k. You're not stuck with just Wall street products. And I'm not saying they're bad. You want to have a mix. I want you to have some stocks, bonds, mutual funds, all that good stuff. But also, shouldn't you be investing your 401k and what you know best? Maybe it's notes, real estate, cryptocurrency, I don't know. What do you love to invest in? Let's take your 401k and invest it in what you know best. Number five. They can be affordable and I love that. Now why I say they can be is because they can be deceptively expensive. Now you're going to go out on the web and you're going to find a 401k, a self directed 401k that's free of charge to set up. Oh, but they're going to get their fees. Trust me. There's administrative fees, management fees, financial planning fees. It's all on the back end. You're going to pay for it and that may be a perfect fit for you. But if you want to self direct your 401k right out of the gate, why not Trustee your own 401k? We've been setting those up for years in our firm and for 300 bucks a year you control it. That's it. And then you just have to report and file the taxes for the 401k and get a binder and the rules to manage it yourself. No other hidden fees. In summary, the 401k for a small business owner is never been better. They're amazing. To defer taxes, to create tax free income inside a Roth 401K and to control it and administer it yourself. It's amazing. So look into it, understand the rules, get a consultation and make sure you make an informed decision on which 401k is best for you. Thanks so much for watching that video and I want to be your source for tax and legal strategies. It's hard enough to live the American dream without being out on the web on Google, trying to find answers to complex questions and just clicking a mouse, hoping you got it right. My team and I want to be a huge resource to you. The law firm, accounting firm, my education resources on my site. Please continue to follow these strategies. I know they'll save you thousands. Now click here if you want to be a part of my newsletter. It's awesome. Weekly updates and deadlines and strategies and tips. Also, subscribe to my YouTube channel. You'll love it. And make sure to click the bell icon so you get a little ping whenever there's a new video. Click. And finally, check out my site marjorycohler.com with all sorts of videos, probably 70 plus videos, 30 plus hours of content that'll save you thousands of.
