Self Directed Solo 401k Recommended as Small Business Confidence Drops

According to the National Federation of Independent Business (NFIB), the small business optimism index dropped one point in February. US small businesses are concerned about sales growth and profits, which prompted them to considered scale back on capital spending and hiring plans. With the 2016 presidential election coming up, many small businesses perceive uncertainty in taxes and regulations.

While the outlook may be full of uncertainty, it is always recommended for business owners to take on proper planning. While many business owners often put forth the growth and survival of their business, they should also plan ahead for their personal finances.

Traditional corporations and larger businesses often can set up a 401k for their employees. Smaller businesses, especially owner-only operations, can fall behind on this aspect. Sense Financial recommends that small business owners look at options available for them.

Among individual retirement plans, the self-directed Solo 401k stands out as one of the most popular choices.

Just like the traditional 401k plan, the small business Solo 401k plan allows plan participants to save and invest on a tax-deferral basis. Taxes are only taken out at the time of withdrawal, allowing investments to grow uninterruptedly for years.

But unlike the traditional option, a Solo 401k is designed for individuals, namely self-employed business owners and professionals. Therefore, the plan is much simpler to set up and maintain. In fact, the plan owner can even choose to act as the plan trustee and self-manage the investments within the plan.

With the Solo 401k plan, business owners have the option to catch up with their retirement. The plan allows a generous contribution limit of up to $59,000 per year, including catch-up contribution for participants of at least 50 years old. This is almost ten times higher than the IRA contribution limit. The best thing is that, if business is slow during a certain year, the plan participant is not required to make contributions to the plan.

Those who opt for the self directed Solo 401k plan can also take advantage of more perks, including almost limitless investment option. As the plan trustee, the plan participant can forgo custodial restrictions and invest their retirement money beyond the stock market. This allows them to truly diversify their portfolio. At a time when business owners are uncertain about the economy, diversified investment is often a popular move to safeguard their wealth.

Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients to obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.

To learn more about Solo 401k, please visit sensefinancial.com.