A Solo 401k is the biggest tax-saver for real estate investors. No one likes to pay taxes, but like death–they’re inescapable.
We can’t help you escape death (we can help you plan for it), but we can help you minimize some of the onerous tax burdens you may incur due to your earned income.
Watch Pete Schindele, CFO and CPA of Royal Legal Solutions, discuss why investors love the Solo 401K in his Royal Investing Virtual Summit presentation, Solo 401k: The Biggest Tax Saver.
In this article, we’ll discuss the features of the Solo 401K, who needs it, why the Solo 401K is the biggest tax-saver, and how to use a Solo 401k to build wealth.
What is a Solo 401k? It’s an individual 401k that primarily benefits a business owner with no employees.
The IRS disallows you from contributing to a Solo 401k if you have any full-time employees in your business. But you can use the plan for both you and your spouse.
Here are the basic features of the retirement plan:
Myth: I can’t have more than a retirement account.
Truth: You can have more than one; it’s legal, and you act as the fiduciary.
Myth: I’m too young to think about retirement.
Truth: You’re never too young to invest in retirement and get returns on any amount you set away in your Solo 401k.
Myth: I don’t have enough money to plan for retirement.
Truth: Some money is always better than no money in your retirement account; if you fail to plan, then you are planning to fail–especially in retirement.
That depends on where you are on your journey. However, a Solo 401k is a powerful tool for real estate investors. As such, real estate investors need a Solo 401k because it enhances their real estate investment returns.
The Solo 401k is an integral part of the bigger picture regarding securing your financial future. It’s part of a comprehensive ecosystem geared to generate wealth and provide asset protection so you can:
Purchasing property with a Solo 401k makes this retirement plan a powerful tool for real estate investors.
Once you buy a property with the Solo 401k, the plan manages the property. That means that the Solo 401k pays the bills, including:
Never mix personal funds with Solo 401k funds; otherwise, you may trigger a massive tax event.
You must deposit rent checks directly into the Solo 401k account. In addition, you cannot use the rental income personally. If you withdraw the funds for personal use, it becomes a taxable distribution.
A Solo 401k is the biggest tax-saver for real estate investors. It allows you to control your money and offers excellent tax benefits.
Moreover, a Solo 401k is especially beneficial when you use it to purchase real estate as it gives you unique benefits and tax-sheltered income. All in all, a Solo 401k is a robust retirement plan that generates wealth.
Do you still have questions about how you can leverage a Solo 401k in your real estate investing journey?
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Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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