This Solo 401(k) Loophole Can Literally Pay You to Save for Retirement

My fellow small business owners, you know how hard it is to build wealth for the future in a tax preferred way. Well, there is a loophole right now before year end that is absolutely critical that will actually help you build that wealth and pay you to do it. And yes, it's regarding the Solo 401K. If you set up your Solo 401K before year end, it unlocks the ability to put money into it next year. Tax deductible for this year and you get to decide when you want to put it in and you can get a tax credit to do it. The tax deduction alone will make you money. Pulling the trigger on a solo 401k before your end. My name is Mark J. Kohler, a CPA attorney, bestselling author, and a business owner myself with a 401k. I love the 401k strategy. So in this video I'm going to explain why this even matters and how you can take advantage of a write off this year and get to decide when you put the money in this 401k next year. I'm going to also explain this loophole where you can get a tax credit that'll actually pay you to implement this 401k before you're in. I'm going to explain how to pull this off with the particular deadlines and the forms. And then finally I'm going to share a secret with you that Wall street doesn't tell you that's going to take this to the next level. Let's dive into it now. Why even do the Solo 401k? Because I want to make sure we're getting a tax credit for making a smart decision. Well, the Solo 401K is one of the most powerful tools for a small business owner to peel off a little profit every year and let it grow tax free, tax deferred, or in some tax preferential way to build your wealth for the future. Solo 401k also lets you, the business owner, make all the decisions on how much you want to put away and when you want to fund it as well. Now to be specific, if you set up the solo 401k before you're in and you're under age 50, you could put in $23,500 or if you're 50 or older, $31,000 next year, anytime you want. But you have to decide now how much you want to put in, you're going to put it on a form. I'll talk about that a little later. And setting up the 401k now unlocks the opportunity to put it in later and you can take a tax off on your 20, 25 tax return to do it. So why does the 401k even make sense? Because we want to make a smart financial decision, not just get a tax credit to do something stupid. Well, I have loved the 401k because it helps small business owners peel off a little bit of profit every year and sock it away in a tax preferred way and invest it in what they know best. Could even be crypto or real estate. If you set up the Solo 401k before year end, you get to put in either 23,500 or 31,000 based on your age next year when it's convenient for you. But you get the write off this year and you can make it Roth where you don't even get a write off this year, but you get to sock away the money next year whenever you want. But if you don't set it up before year end, you can set up a 401k next year. But you only get to do a company match on a certain proportion of your profit. Not good. So first and foremost we want to use a tool that's tax preferred to help small business owners specifically to put away money at their convenience and take a tax write off this year and then invest the money and what they know best. Sounds pretty freaking amazing, right? Well, let's talk about the loophole. Now this loophole was passed in the Secure act in 2022, but it's just not talked about because it's based on two different credits. One of them's not allowed for solopreneurs or S Corp owners with the Solo 401k, so they missed the other one entirely. And what it is is the auto enrollment feature. And what it's encouraging business owners to do is auto enroll their employees in the 401k plan. Well, you're the owner of, you are the employer and the employee. So why not auto enroll yourself? Well, when you check that box, when you set up a solo 401k, you get a $500 tax credit every year for three years. That's $1,500 in tax credits. Well, a $500 tax credit is equivalent to about a fifteen hundred dollar tax deduction. So to set up a solo 401k, we charge $1,000 and you work with a real lawyer to do it. It's self directed and you can be the trustee and save a ton broker dealer in Wall street to run it. It's your solo 401k, very low fees. So you get a tax write off of a thousand dollars to set it up and another $500 tax credit, approximately $1,500 in write offs to do it. You're actually making money to set up your solo 401k. That's the loophole is simply making auto enrollment a requirement which you would do for yourself anyway. So when we set up a solo 401k in our office for you, we automatically check that box and get you the $500 credit. You've got to tell your accountant this is what you did. And I'm training tax advisors every day around the country with this type of loophole that's perfect for small business owners. Now, why this law was passed in the first place giving this credit for employers to auto enroll their employees is because they want people to save more. They want average employees out there to get involved in the 401k. And they're saying, hey, employers, if you auto enroll your employ ease, we'll give you a tax credit to do it. Well, a lot of employers don't do it because it kind of pisses off their employees. Their employees, like, I don't want to be in the 401k. And the employer's like, well, you should be. Well, that's my choice. Okay, so they don't do the auto enrollment without kind of sometimes having a political fallout with their employees. For solo 401ks, you are the employer and the employee. Why not do it? It's exactly what you want to do so that you can play in the game and dial it up or dial it down at your discretion, which a normal employee can't do. So you get the best both worlds. Now, how do you do this? Well, it's a confluence of two or three different things. First, you want to make sure that you pull the trigger on the setup of the 401k before the deadline. Now, technically, the deadline is December 31st, but the IRS goes on vacation on December 26th, meaning they take their computer system and shut it down for maintenance. Then we've got this little thing called Christmas on December 25th. So our internal deadline to get you done before the IRS shuts down their computer systems is December 15th. By then, we can get you your paperwork, you can sign it, we can get your tax ID application through the IRS, and boom, you've got your solo 401k before the deadline. So December 15th is a big deal. Our law firm information is down below where you can get into a conversation with the lawyer immediately. And get this started. Number two, if you're a small business owner considering a solo 401k, then you probably have an S corporation. And with an S corporation you know your pegging your reasonable salary or compensation with your W2 in the next few weeks on that W2, you need to designate what you think you're going to put in your 401k next year. You don't have to put the money in, but you kind of have to earmark what you would like to put into the solo 401k. You can say it's traditional, it's Roth, whatever. Now if you change your mind later, you can amend your W2. But we want to nail that W2 down as best we can in the next four to six weeks so that you don't have to worry about it. Then you can put the money in when you want next year and start building that solo 401k. Finally, there's a special form to claim this credit. It's form number 8881. And your tax advisor accountant should know exactly how to handle this. And you just want to let them know I set up a new Solo 401k and I'm going to auto enroll myself. Your accountant should know. Oh, oh, you just got the tax credit. Let's take advantage of it. The problem is a lot of taxpayers aren't talking to their tax advisor or they're trying to pull this off on TurboTax. Please be careful with this. The DIY approach with tax planning when you're making money is not always the best methodology. So I have built to help you if you're interested. A tax advisor network of certified tax advisors that speak Mark Kohler. There's another link down below. Look for that network and you can get to it on my website@markjkohler.com and you can find a tax advisor that knows what the hell they're doing. Now finally, what is this secret that Wall street doesn't tell you about? In fact it's part of my book here. I wrote the Financial Freedom Book. What Wall street isn't telling you and that is with a properly designed Solo 401k is that you can self direct it. You can have an app immediately tied to your 401k to buy cryptocurrency. You can buy gold and silver. You can buy real estate. You can loan out money out of your 401k to small business owners and even invest in other small businesses. That's a fully self directed solo 401k and it doesn't cost any more than a regular 401k for small business owners. That's the secret because you want to get 10, 15, 20% returns in this solo 401k that's going to exponentially build your wealth. So in summary, check this out. You're getting to put money away at your convenience next year. Get a tax write off at the level you want to dial up or dial down. You get a tax credit that pays you to do this whole thing. And third, you get to self direct that money and invest in what you know best. People. This is what the wealthy are doing. It's what I'm doing and it's what thousands of entrepreneurs do once they figure out the tricks of how to build wealth. Please check out the information down below. Get engaged in the process and get an appointment set up right away. You do not want to miss this deadline. If this video was helpful and you loved it, please like and get subscribed. I've got more videos coming just like this. My name is Mark J. Kohler and I'll see you in the next one.