With the New Year come new problems and headaches. In order to save yourself from them start saving money now and have a carefree 2013. There are many different ways to save your funds in 2013. One would of course start thinking of a never-ending coupon cutting or other tedious methods to cutback costs but surprisingly you will be introduced to a saving method that you might have never heard before. It will guide you towards a peaceful retirement for sure. The solo 401(k), in other words the individual 401(k) or uni-k, can be a life-changing experience.
Solo 401(k) is probably the best way to secure one’s retirement if he/she is a self-employed person. It is a retirement saving trust that allows sole owners or self-employed people to contribute up to $50,000 annually to their 401(k) plan. In case of a married couple the benefit is doubled up to $100,000 as the partners on the payroll are exceptions to the sole worker eligibility law.
The Origin of the Solo 401(k)
It all started in 1978, when Congress decided to push Americans towards saving money for their retirement. This gave rise to lowering state and federal taxes. Congress was determined to demonstrate to the public how they can save money. Later the Tax Relief Reconciliation Act was accepted. The name itself comes from the section number (401) and the paragraph (k) in the Internal Revenue Code. A benefits consultant Ted Benna was an originator of the 401(k) plan. In 1982, the plan was available for the usage as IRS accepted the plan. The final shape to the regulations was given only after ten years, in 1991.
The Advantages of 401(k) Plan
Even though you may be enjoying your youth and retirement may not be a thing you have to worry about for the nearest future, think about the profit you would gain out of starting investment at an early age like 25 or even 30.
One of the main advantages of the 401(k) plan is lower taxable income. Another great benefit of this retirement plan is that you do not have to remember to make deposits towards your savings; they accumulate on their own. And the main purpose is an opportunity to retire without doubts and fears.
The Eligibility Requirements
There are two main eligibility requirements that an investor must meet in order to qualify for the solo 401(k) plan: the deficiency of the full-time employees and self-employment.
Some of you may think that you are too young to think about a retirement plan or that you can’t afford it, but do not let these thoughts disturb you as Solo 401(k) is low-cost and very trouble-free to start .
Yes, it does sound too good to be true and you must be wondering what the trick is, but there is no trick. That is exactly why the solo 401(k) plan is such a popular plan for a carefree retirement.