Today we look at a company named My Solo 401k Financial. What is My Solo 401k Financial (mysolo401k.net)? Self-employment has many benefits, but it does not come with an employer-sponsored retirement plan like a 401(k). Let’s delve in and find out!
Company: My Solo 401k Financial LLCä
Location: 701 Palomar Airport Rd Ste 300; Carlsbad, CA 92011-1028
Overall rating: (4 / 5)
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What is My Solo 401k Financial?
My solo 401(k) is an individual 401(k) plan that is only available for self-employed persons. It is not a scam: Congress created the solo 401k Financial to put the self-employed on the same playing field with big companies that also can adopt a 401k plan.
As a business owner, you may be eligible to establish a solo 401(k) plan if you do not have any full-time employees besides your spouse.
This type of individual 401(k) plan allows you to contribute to your retirement savings, as well as potentially cover your spouse. The IRS prohibits contributions to a solo 401(k) if you have any full-time employees.
- The Solo 401k allows for alternative investments.
- Has higher annual contribution limits compared to self-directed IRAs.
- There is no minimum initial deposit requirement.
- The ongoing fees are reasonable.
- The setup fee is slightly higher than average, and
- Strict eligibility applicant qualifications. Only self-employed individuals or owner-only businesses can qualify.
My Solo 401k: Qualification
A solo 401(k) is a retirement account for business owners without employees. To qualify for a solo 401k plan, you need to be self-employed and perform at least part-time self-employment activity.
You must also have active income, which is subject to Social Security taxes, rather than passive income, which is considered capital gains income and is not subject to these taxes. For more information on the eligibility requirements for a solo 401k, you can visit the link.
Solo 401k Financial Contribution Limits
The Solo 401(k) contribution limit is the maximum amount of money that you can contribute to your Solo 401(k) plan each year. For the tax year 2022, the contribution limit was $61,000, and for the tax year 2023, it is $66,000. However, if you are 50 years or older, you are eligible for a catch-up contribution of an additional $7,500 in 2023.
As the owner of my Solo 401(k) plan, you are considered both the employer and the employee. This means you can contribute to the plan in two ways: as an employee and employer.
As an employee, you can contribute up to $22,500 in 2023, or 100% of your compensation, whichever is less. If you are 50 years or older, you are eligible for an additional catch-up contribution of $7,500 in 2023.
As an employer, you can make a profit-sharing contribution of up to 25% of your compensation or net self-employment income. Your payment is limited to $330,000 in 2023. Net self-employment income is calculated as your net profit minus half of your self-employment tax and the plan contributions you have made for yourself.
My Solo 401k Tax Advantage
My solo 401(k) retirement savings plan allows self-employed individuals or small business owners to contribute to a tax-advantaged account. You can choose between a traditional 401(k) or a Roth 401(k).
With a traditional 401(k), you get a tax break on the money you contribute in the year it is made. However, when you withdraw money from the account in retirement, it will be taxed as ordinary income.
On the other hand, a Roth 401(k) does not offer a tax break on contributions but allows you to take tax-free withdrawals in retirement.
It is generally a good idea to choose a Roth 401(k) if you expect your income to be higher in retirement and a traditional 401(k) if you expect your income to be lower in retirement.
However, there are strict rules about when you can access the funds in either account. If you withdraw money before the age of 59 1/2, you may be subject to taxes and penalties, with few exceptions.
My Solo 401k Financial; Alternative Investments
Alternative investments are financial assets that do not fall into the traditional categories of stocks, bonds, and cash. These include real estate, precious metals, commodities, and digital assets like Bitcoin.
In recent years, alternative investments have gained popularity among individual investors looking to diversify their portfolios, including those using 401k and IRA retirement accounts.
The Solo 401k allows the investor to invest in any asset not disallowed by IRS regulations, thereby expanding the range of investment options.
Opening a Solo 401(k) Account
To open My solo 401(k), you can
- Visit the My Solo 401k website.
- Provide your Identification Number.
- You will be given a plan adoption agreement and account application to complete.
- Once done, you can set up contributions and choose from various investments, such as mutual funds, index funds, exchange-traded funds, individual stocks, and bonds.
You must establish the plan by December 31st and make your employee contribution by the end of the calendar year if you want to contribute for the current year.
As the employer, you can typically make profit-sharing contributions until your tax-filing deadline for the tax year. If your 401(k) plan has $250,000 or more in assets at the end of the year, the IRS requires you to submit an annual report on Form 5500-SF.
If you need assistance managing the funds in your solo 401(k), you can consider using an online planning service like Facet Wealth or Personal Capital. These companies offer low-cost access to human advisors and comprehensive financial guidance, including how to invest your 401(k).
Solo 401k For Spouses
The business owner and their spouse can participate in the same solo 401k plan if the spouse also works for the self-employed business. This allows them to make annual contributions (such as Roth, pretax, and voluntary-after-tax) and transfer or rollover outside retirement accounts (such as traditional 401k, PS, TSP, 457b, and IRAs like traditional IRA, SEP IRA, and SIMPLE IRAs) into the plan.
To keep track of each participant’s funds and sources, separate holding accounts must be set up under the solo 401k plan.
Is My Solo 401(k) Financial a Scam?
So, is My Solo 401(k) Financial a scam? No, of course not, it´s not a scam it´s a legit business. It got a real physical address and real physical owners. However, if it´s your absolute best alternative out there is a whole other story, that will of course depend on what your preferences are as well obviously.
My Solo 401k Financial LLC Reviews & Ratings
In our reviews we always look at the most well-knwon and trusted, independent third-party consumer protection agencies, to see what they got to say. Below you can see the results, and as always with click able links that opens in new windows.
BBB (Better Business Bureau)
Overall rating: A+ click here for details (opens in new window)
Overall rating: ratings: N/A
Overall rating: (4.5 / 5) (from 7 reviews) click here for details (opens in new window)
Conclusion from these ratings:
Well, as you clearly can see above the ratings from BB is good, the company is BBB accredited with an A+ grade. It also has a 5-star rating from customer BBB listing with countless testimonials. We also find good Yelp reviews. We didn´t find anything on Trustpilot though.
Worth to mention: My Solo 401k Financial has also received 45 reviews from revdex with customers, showing satisfaction with its products.
Frequently Asked Questions (FAQ)
Is it possible to invest in Bitcoin through My solo 401(k) plan?
My solo 401(k) plan allows you to invest in alternative assets, including bitcoin.
How can a Solo 401(k) help small business owners accelerate their retirement savings?
You can speed up your retirement savings using a Solo 401(k) as a small business owner.
Is there a 401k plan establishment deadline?
There is a deadline for establishing a 401(k) plan. Generally, a 401(k) plan must be confirmed by the end of the tax year for which the employer wants to claim a tax deduction for contributions made to the plan.
What are My Solo 401k financial fees?
MySolo401k charges a one-time setup fee of $525 and an annual fee of $125. The yearly fee covers the updates required by the IRS to the plan documents and the filing of tax documents, such as 1099-R or 5500-EZ.
Final words & verdic
Overall rating: (4 / 5)
Ok, that sums up the overall view pretty good I think, this is a legit company for sure. However, if it´s your best alternative out there is another story and you should compare with other options before you make any decisions.
As always, the decision is up to you to make, this review was only to help you with that job and make that easier for you.
We have listed pretty much each and every alternative out there on this site for you, so you can perform a search here. If you (like us) thinks gold & silver might be one of the best ideas in these times then make sure to check out our top-5 list below:
I hope you found this short review on My Solo 401k Financial to be helpful and that you now have a better understanding on what it is and that it´s not a scam. If you have used any of their service then please share your experience in the comment section below as it can help others!
I wish you success!
Glanz, investor and team member on Goldretired.com