Retirement Planning: This 401(k) Plan for Self-Employed Now Offers $1,500 in Tax Credits — What Other Incentives Are Available?
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Josephine Nesbit
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Sean Fisher
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My Solo 401k Financial‘s self-directed 401(k) plans for self-employed individuals now qualify for up to $1,500 in tax credits under the Secure Act. The tax credit is a dollar-for-dollar reduction in your business tax liability.
“The auto-enrollment tax credit provides substantial incentives for self-employed individuals to open a Solo 401(k) or even upgrade an existing plan in order to be able to claim the credit,” Mark Nolan, founder and chief operating officer of My Solo 401k Financial, said in a company statement.
A solo 401(k) plan is a retirement account for self-employed individuals or business owners with no full-time employees, but the IRS says you can use the plan to cover you and your spouse. There are no age or income limits, but like most retirement plans, contribution limits can change annually.
According to the company, there’s no requirement to make annual contributions to claim the tax credit. However, those who do want access to the “generous annual contribution limits” must sign up or upgrade an existing plan by Dec. 31, 2023. The annual limit is $66,000 for those under age 50 and $73,500 for those 50 and older making catch-up contributions for the 2023 tax year.
The solo 401(k) plans from My Solo 401k Financial also qualify for the auto-enrollment tax credit and other features, such as pre-tax, Roth and Mega Backdoor Roth Solo 401k Contributions, 401k Participant loans up to $50,000 and alternative investments, such as real estate, private equity, notes, precious metals and more.
With the $1,500 tax credit spread out over three years, My Solo 401k Financial stated that the cost to open and maintain a solo 401(k) is free. To claim the credit, you must file IRS Form 8881 and claim the $500 credit each year for up to three years.
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