QUESTIONS: If my goal is to contribute a maximum of 25% of my income up
to $44k a year and only invest in equities then a SEP IRA is the way to go.
However, if my goal is to contribute 25% of my income up to $44k, as well
as an additional solo contribution and have the flexibility to invest in
equities and/or private investments then solo 401k is a better option. For
example, on $144k salary I am limited to 25% or $36k with a SEP IRA. However,
with a solo 401k, I could contribute the $36k SEP portion, as well as $15k solo
401k portion.
To get this started, we could set up
a solo 401k through same financial institution (LPL) as my SEP IRA and continue
to have the equities portion managed by my financial adviser moving forward.
Based on $144k income, I would continue to put $36k into it each year.
Additionally, i would contribute $15k (based on $144k salary) to my new solo 401k and would have this money available for private investments.
Is this correct?
ANSWER: You are correct with respect to the
above except that LPL would not setup the solo 401k, but rather manage the
funds. As the solo 401k provider, we would take care of the solo 401k
compliance requirements in conjunction with you, such as filing the annual Form 5500-EZ, providing the solo 401k plan document updates, 1099-R reporting and
solo 401k loan document preparation.
Thanks,
Rick in San Diego CA
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