Individual retirement accounts (IRAs) and 401(k) accounts are two of the most well known types of retirement accounts available today. However, self-directed, or solo, 401(k) accounts are growing in popularity and there are plenty of reasons why. Not only can you invest in traditional things, like stocks, bonds and mutual funds – you can also invest in real estate, precious metals, renewable energy sources, foreign currency and so much more. Unlike self-directed IRAs, you do not need a custodian in order to make your investments. With complete checkbook control, your investments are entirely up to you, made when and how you want to. In addition to these more diverse investment options, they also come with higher limits for contributions, personal loans, and more. Have we peaked your interest? If so, you might wonder how you can qualify for such benefits.How Do You Qualify?You may not realize this, but qualifying for a solo 401(k) account is rather easy. There are only two main eligibility factors must be met in order to qualify for a solo 401(k) account. Let us take a look.1. Self-Employed IncomeThe first requirement revolves around owning a business and generating income. In other words, you must own your own business, which generates profits on a full-time or part-time basis. First, let us discuss what type of business entities qualify. According to the Internal Revenue Service (IRS), you are considered self-employed if you own and operate one of the following business entities: sole proprietorship, limited liability corporation (LLC), C- or S-corporation, a partnership, or a limited partnership. While there is paperwork associated with many of these types of business entities, you may want to note that the IRS defines a sole proprietor as someone who owns an “unincorporated business” by his or herself. As such, there is no official paperwork that is filed to formally establish this entity. Therefore, if you have a side hustle, such as selling homemade wares on Etsy, offering freelance writing services, or self-publishing that novel you have been working on – you qualify as a sole proprietor. Now that you have established whether you own a qualifying business entity, you need to determine whether or not you display “self-employment activity.” In short, the IRS views generated incomes as proof of your self-employment activities. You should also note that the IRS does not care about how much time you spend on your business so long as you have a reported income generated by it. This means that whether you are full-time, part-time, or even just supplementing your primary income through a side hustle, the IRS considers the income a qualifying activity. Therefore, even if you generate very little income, this is still proof of your business operations and qualifies you for a solo 401(k) account. Additionally, even if you have a full-time job elsewhere, if you own a business that generates income, you can simultaneously hold a retirement investment account through your job as well as a solo 401(k) through your entity.2. No Full-Time EmployeesPer the IRS Internal Revenue Code, as a self-employed individual, you cannot have full-time employees working for your business entity. There are a few exceptions, however. An employee is excluded if they: a) work less than 1000 hours a year, b) are under 21 years old, c) are union workers, d) are a non-residential employee or e) are an independent contractor. Additionally, if your spouse works for your business, the IRS considers them an “owner-employee” and exempts them as well. Similarly, any partners in a partnership or member of an LLC are also exempt.What to Do If You QualifyAfter reviewing the two eligibility factors above, do you qualify for a solo 401(k) account? If so, you may want to look into opening an account quickly. After all – the investment opportunities alone go beyond those of almost every other type of retirement account options. This type of diversification, in addition to the unparalleled level of control you have over your solo 401(k) account, are benefits worth investing in. At Royal Legal Solutions, we want to see your retirement dreams come true. Having the financial security to retire and live comfortably is a goal almost all American’s share and we are no different. Our experts want to help you get there too. If you have questions about opening a solo 401(k) account, want to know more about retirement accounts in general, or want to clarify any of the numerous IRS regulations that govern your retirement funds, contact us today.