1. We know that an optimal retirement plan is the key to a financially secure future. The well-known 401k plan is traditionally associated with individuals who work for a company or an organization. The good news is that self-employed individuals and small business owners without full-time employees can utilize their very own Individual 401k.

    The Creation of the Solo 401k

    In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act, which includes an amendment that created the existence of the Solo 401k retirement platform.
    The Self Directed Solo 401k Plan, also known as Individual 401k, One-Participant 401(k) or Self-employed 401k, is an IRS-approved qualified retirement plan, specifically designed for Individuals who are self-employed or own small business without any full-time employees other than his or her spouse.

    With this retirement platform, the Solo 401k plan participant can take the role of both employee and employer, enabling him or her to enjoy a high Solo 401k contribution limit.

    Solo 401k Contribution Limits

    For individuals under the age of 50 during 2013, the maximum contribution limit as an employee is $17,500.  Individuals ago 50 or older have a maximum contribution limit of $23,000 as an employee.

    But since you are also acting as the employer of your business, you can also contribute an additional 25% of the compensation as the profit sharing component (20% if it is a sole proprietorship or an LLC) to the Solo 401k.

    The ability to contribute to the plan as both employee and employer enable the high Solo 401k contribution limits.  In 2013, the Solo 401k contribution limit is $51,000 for those under the age of 50 and $56,500 for those age 50 and above.

    The Solo 401k plan can also be designed with a Roth component.

    Solo 401k Funding

    Funding your Solo 401k account is simple. You may roll over your funds from various sources, such as SEP's, IRA's, Keogh plans, previous employer 401k plans and Defined benefit plans. You can roll over funds to your Solo 401k tax-free, an amazing feature that lets you keep your wealth intact.

    Solo 401k Trustee

    A trustee is always designated to hold the assets of every 401k retirement plan. But with the Solo 401k retirement plan, you act as your own trustee, giving you total control over your retirement plan assets.  The Solo 401k’s checkbook control enables you to invest account funds into almost any opportunity, tax-free.  

    As a trustee of your own retirement plan, you are responsible for investing your retirement plan assets prudently and productively. You can make investments on almost any opportunity by simply writing a check from your Solo 401k trust account. However, according to the Solo 401k rules, you are not allowed from benefiting directly from your retirement plan investment. This means that you cannot use your personal money with your trust investment, and you cannot do any business transaction with the trust.

    Freedom in Investment

    With the Solo 401k plan, you are free to choose investment options that suit your skills and knowledge. Because you are the trustee of the retirement plan assets, you do not need third-party custodian consent to make an investment. This feature gives you the freedom to choose and eliminates custodian fees when making an investment.

    Tax-deferred Real Estate Investments

    The Solo 401k plan allows you to make an investment in real estate properties which generate profits that flows back into your retirement account without paying any tax (until you decide to take a distribution).

    In addition, using the Self Directed Solo 401k Plan to invest in real estate is exempt from paying any UDFI tax.

    Borrowing from the Solo 401k Plan

    Another benefit of the Individual k or the Solo 401k plan is the capability it gives to the participant to borrow money from his or her retirement account for any purpose. The internal revenue code section 72(p) allows the plan holder to take a loan up to 50% of the total retirement account value or $50,000 (whichever is lower), tax free!

    Repayment of the loan can span up to five years, starting from the date the loan was initiated.
    The Solo 401k rules state that:
    ·         The Loan should be paid at least quarterly with the rate of the minimum interest of the current prime.
    ·         The total loan should be paid back in full (including interest)
    ·         A loan default can result in IRS penalties.

    Solo 401k Eligibility             

    To qualify for the Solo 401k eligibility, an individual must meet the following requirements:
    ·         The presence of legitimate self-employed activity.
    ·         The absence of qualified employees

    Any individual generating income from self-employment or a small business without employing full-time workers (with the exception of a spouse) is eligible for the Solo 401k plan.  

    We hope that the Information provided about the Solo 401k basics will help you decide on whether or not to utilize this retirement platform. If you have any additional questions or concerns about the Solo 401k plan, please contact 949-228-9394 to talk with our IRA experts.
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  2. Individual 401k Rules
    Independent contractors or self-employed individuals are the categories where most real estate professionals fall in. Being in the real estate industry requires you to have a lucrative retirement plan with Checkbook Control features such as the ones from Sense Financial. The ideal retirement account for real estate professionals, Solo 401k, is the top retirement plan for self-employed or small business owners. The company provides salient information about this lucrative retirement account especially individual 401k rules.

    Here are some of the basic things to learn and understand about the retirement plan tailored for self-employed or independent real estate professionals. Learn 401k how it works information, updates about the plan contribution and other important individual 401k rules.
    • The retirement plan allows account owners to use their retirement funds or savings in any investments or transactions of their own choosing.
    • The Solo 401 k plan is a beneficial retirement account for  self-employed individuals with tax benefits, no penalty and investment privileges among others.
    • Individual 401k rules state that investors could use their retirement funds to finance investment ventures without securing permission or consent from custodians.
    • As of 2013, the annual and max 401k contribution is $51,000 for those under the age of 50. Plan holders who are 50 years old and up could add $5,500 for their annual contribution which is also known as catch up contribution. Thus, for account holders aged 50 and above, their highest annual contribution limit is $56,500.
    • The borrowed retirement fund used for real estate investment is payable over a time frame of five years. Account holders could also pay off the amount at very small or minimal interest rate. The payment mode is at least every quarter.
    • The individual 401k rules emphasize that borrowers could use a total account value of $50,000 or up to 50% of their retirement money, whichever is less.
    • Retirement plan holder of the Solo 401 k account could borrow and use their retirement money to finance expenses such as bill payment, credit card payment, mortgage and many others.

    Sense Financial has been helping individuals who want to invest, self-employed and business owners of small-scale enterprises with the Solo 401 k plan. Knowing the different fundamental individual 401k rules could help you learn more how this retirement account works for you. It also shows the innumerable perks and benefits to enjoy.
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  3. Best Individual 401k Plans
    Best Individual 401k Plans
    Baby boomers comprise 28% of the population segment and are now heading towards retirement age. Unfortunately, with the yo-yo effect and fluctuations in the economy over the recent years, many individuals who are looking forward to retiring at 65 are left with no choice but to stay in the workforce and not leave just yet. That’s because the retirement funds they invested on are not sufficient enough to supply their needs. This is not the case for those who have the best individual 401k plans.
    According to financial experts, there are various steps on how to wisely and effectively plan your retirement. Here are essential steps to give you an idea of the most lucrative retirement planning to embark on:

    Determine your retirement needs

    You need to know and understand your realistic needs for retirement. It is imperative to calculate the amount of money you will need in the future when you retire. How or where do you want to live and how much retirement fund would suffice for you to live the kind of lifestyle you are accustomed to? Calculate important things including your monthly expenses and the amount of money you need to spend for hobbies, vacations, entertainment and the likes that would help you enjoy your retirement.

    Know how to start your best individual 401k plans

    Sense Financial Services LLC is the top provider of the best individual 401k plans also known as Solo 401k. The financial services company is known to offer lucrative retirement plans for qualified individuals particularly self-employed and owners of small businesses. You can sign up for a Solo 401k retirement account to begin your contributions. This is one of the most essential and helpful financial investment on retirement plans because of its unmatched perks and benefits such as tax-deferred and tax-free features on your investment.

    Prioritize your retirement savings

    It is imperative that you prioritize your contribution to a retirement plan. You can opt for self-directed IRA to 401k plan such as the one offered by Sense Financial. The best individual 401k plans allow investors to explore different investment and earning opportunities especially in the real estate industry.

    Choose to invest on high-yield alternative investment ventures

    Solo 401k retirement accounts are highly lucrative especially if you use it to finance your investment ventures. The terms and conditions for this type of retirement account are quite simple. Account holders are allowed to borrow their retirement funds in order to finance their investment in various industries or trade such as real estate, tax liens, stock market, gold and other precious metals, currency and public or private businesses.
    The benefits of choosing the best individual 401k plans particularly Solo 401k from Sense Financial is that you enjoy tax-free investment. That means you get enjoy growth and increase of your retirement funds without the hassle of complying with tax deductions. Moreover, you can invest on different investment opportunities through Solo 401k plans and need not secure the consent of custodian to be able to utilize and invest your money upfront.
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  4. Roth Solo 401k
    When it comes to working on a self employed level, many people don’t realize how hard it is to save money and make things better for the future. In fact, many assume that it’s all done through financial institutions while someone sits back and just waits for things to happen with their money. That’s not the case at all!  However, Solo 401k Plan, which is designed specifically for the self-employed, maybe the solution.  These plans can be self-managed, which is a great advantage, the management done without custodian involvement.  This can result in great savings. Not only that, the IRS rules allow contributions into Solo 401(k) Roth, which is another type of savings option (tax-free).

    Solo 401(k) Roth

    For those that are not familiar with the option, Roth accounts allow people to save money that is tax free. There is a limitation on the income that can be used to put in this type of account (only for IRAs not 401ks), but it can grow significantly if it remains untouched year after year. Distributions from this type of account taken our Tax Free and turn into a deduction for those that are looking to save without having to pay the IRS for the privilege.

    Understanding how to get this done is an interesting concept, as you can’t simply convert Solo 401k to roth without looking at some detailing and follow the set parameters. For most people, two accounts need to be set up, so that one is a pretax account and one is a directed tax account. The IRS requires both funds to be tracked and isolated because if they co-mingle, penalties will occur. This might sound confusing, but if you have a provider that works with solo or self managed 401ks and roths, you can then easily have them assist you with many of the rules and regulations.

    Not all providers allow both accounts, which is something to consider. Remember, initial accounts and pretax 401(k) funds are not to be in the same accounts and should be tracked separately or else there will be issues in the long term. Reading specific information on each option can help understand what is needed in order to be in compliance with the regulations of each option.  By understanding the percentages of total plan assets and pre tax, you can easily create investments that will be beneficial in the long term. 
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  5. The internet has become a common source for investors who are looking for alternatives in standard stocks and bond. Unfortunately, with information being so readily available for researching strategies and ideas associated within self-directed IRA’s, there is also a growing amount of misinformation and misleading facts in regards to self- directed IRA’s.
                                        
    In order to help investors avoid penalties, here are the top 3 misleading myths about self-directed IRA’s and the facts to help clear them up.

    Myth #1: If I chose to purchase real estate, I will be penalized or taxed for rolling funds over into my IRA account.
    The Truth: This is a common myth many CPA’s and financial advisors hear in regards to a self-directed IRA. Investors feel that by rolling your account over into a self-directed IRA you are creating a taxable solution. Simply taking money out of your IRA will cause penalties, however if you roll over your tradition IRA into a self-directed IRA, all profits generated are tax-free. Real estate is the #1 alternative for investment in a self-directed IRA. Real estate offers such a wide selection of choices that its potential is practically limitless!  A self-directed IRA functions just like any tradition IRA but it offers more diverse choices for investment opportunities.

    Myth #2: I need to have an LLC in order to have a Self-Directed IRA:
    The Truth: It’s a popular and common myth that an investor must establish an LLC in order to have a self-directed IRA. The growing idea in the marketplace is that you can invest your IRA into a limited liability company also called a “checkbook controlled IRA,” although this gives you even more privileges for investing with your IRA – it is not required.

    Myth #3: There are more than enough investment choices with a standard IRA:
    The Truth: If you’re only look in the assets of stocks and bonds then a standard IRA is definitely a solid choice for investments. However, if you’d like to dig deeper into your IRA and broaden your investment choices, then a self-directed IRA is the way to go. Real estate, tax liens, gold or private businesses, all functions that your self-directed IRA will allow you to invest in – putting your money where you want to put it!
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  6. Individual 401k – Is it a good tool for the self-employed?


    Individual 401k plan is the preferable retirement investment vehicle for the self-employed individuals who want to maximize tax savings and accelerate growth of their retirement funds. These plans are available to the individuals who are self-employed and to the business owners who do not employ full time W-2 employees. All types of business entities are eligible for Individual 401k plans including sole-proprietorship, partnerships, C corporations, sub-chapter S corporations and LLCs.

    Advantages of Individual 401k Plans


    • The plan allows tax-free loans up to $50,000 or 50% of the plan balance, whichever is less.
    • This plan has a high contribution limit of $51,000 for the individuals who are below 50 years and $56,500 for those who older than 50.
    • The contributions to these plans are tax deductible (except Roth).

    What to Consider in Individual 401k

    So, if you are planning investing using Individual 401k plan, you may be thinking the best plan for you as well as your needs. You need to know that all 401k plans are approved by the IRS when you look for the best one for your need. As such, you should reflect on the following four items below before you take any decision.

    If you’re looking for a plan that allows investing in alternative assets, such as real estate, precious metals, tax liens and private businesses, then a self-directed Individual 401k plan with checkbook control offered by Sense Financial will be the best choice.

    If you want to have the ability to borrow from your Individual 401k, then a self-directed Solo 401k plan will be the best option. In this case, you should try to avoid selecting Individual 401k plans that are offered by Charles Schwab, Ameritrade, Fidelity, Chase and E-Trade since they do not offer the Solo 401k loan benefit. When carefully comparing Sense Financial Solo 401k vs Individual 401k at Chase or other providers, it becomes clear that advantages of self-directed Solo 401k plan and the freedom it offers outweigh custodial plans.

    The factors above should be considered when deciding which provider to choose.  Getting the best service becomes much more important if you wish to invest in alternative investment opportunities. It is also a wise decision to set up a plan that has loan provision and offer after tax, Roth sub-account.
    Thus, the best solo 401k providers offer loan options, self-directed solo 401k plans with checkbook control options, alternative investment options and full service options at an affordable price.

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  7. Due to the recent increase in the Solo 401k Contribution Limits the interest in this Ultimate Retirement Plan for the self-employed has also increased.  The increase in tax rates has made many individuals looking for ways to reduce tax liability.  This Owner-Only plan has been known as good tax shelter, but now, because of the increased Solo 401k Contribution Limits, the potential to save on taxes is even greater.
    In the year 2013 the maximum Solo 401k Contribution Limits have gone up to $51,000, according to the IRS.  However, those over 50 year of age can make additional $5,500 in "catch-up" contributions, making the total of $56,500!  Although contributions for Traditional IRA and Roth IRA has also been increased by $500 this year, Solo 401k Contribution Limits are nearly 10 times more compared to an IRA. 
    Individual 401k Plan (also known as Solo 401k or Owner-Only 401k) is a simplified version of conventional 401k Plan and was designed specifically for self-employed and small business owners without full time staff.  The plan allows account holder make contributions as employee as well as the employer.  The combination of two: profit sharing (on the company side) and elective salary deferral (on the employee side) make up the total contribution limit.
    The employee elective deferral portion for 2013 is $17,500 ($500 increase from 2012).  Those individuals over 50 year of age are allowed additional $5,500 in "catch-up" contributions, which makes the total $23,000.  
    On the business side, the employer profit sharing contribution is additional 20-25% of the compensation paid, depending on the way business was structured.  In the case of a corporation - 25% of the compensation, for sole-proprietors - 20% of the next business income.
    The high contribution limit can be used to even greater advantage when the spouse also works for the business.  As a full-time employee of the business, the spouse can also make contributions, almost doubling the already high Solo 401k contribution limit. 
    For those who qualify, the Solo 401k retirement plan offers many advantages, high contribution limits being one of them.  These increased contribution limits provide a greater opportunity to shelter more income, tax-free.  For more information on the Solo 401k, please contact:  http://www.sensefinancial.com/
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  8. There is no way to financial independence without gaining control on monetary assets. Knowing how to manage finances is important irrespective of whether you've just completed your graduation or heading towards your retirement and saving money using Solo 401k Plan if your are self employed or self-directed IRA for those who are W-2 wage earners. You have to play an active role when it comes to determining the direction of the flow of your money. Not only will you save more, but you'll be able to get rid of debt faster and achieve your future goals more comfortably as well. The following are a few points that will help you manage your personal finances better:

    Budgeting

    Don't have a budget? Get on your toes and make a realistic one. That's how you gauge the difference between your monthly income and expenditures. You have to add up every penny you make to calculate the exact amount of money that you make in a month. Similarly, add all of your monthly expenses including your mortgage and debt payments. Now that you have the figures, compare your monthly income with your monthly expenditures. All that you've to do is make sure the expenses stay well below the income. That's how you'll be able to ensure quality personal finance management to a great extent.

    Unnecessary expenses

    There is no other way but making cuts in spending if you're to bring your expenses below your income. Cuts in spending can be made successfully only when you have a clear idea of where your money is going. This will require you to maintain a log of your daily expenses. That's how you'll know about expenses that need not exist. Act accordingly and save money by cutting down unnecessary expenses. This is a great way to address debt issues. 

    Debt management

    Start paying off the high interest debts first. This way you'll be able to save money on the interest. There is no point in letting the debt amount rise just because of the interest that it carries on it. Further, paying off the larger debt first will make it far easier for you to tackle the smaller ones that follow. Start paying off your mortgages once you're done with your debt payments. Make sure you're not using credit cards while making debt payments. This will further intensify the debt burden on you.

    Plan your future well

    You should have your future plans at the ready. Don't forget to include the short term as well as the long term goals as you prepare the financial road map for your future goals. Be realistic while making your future plans. This is important as you can't afford to break your budget on your way to achieve your goals. 
    You can't stop working on your goals the moment you have achieved them. You must pay attention to whether or not your goals fit your present lifestyle. Make changes accordingly so that no amount of pressure is created on your budget. That's how you don't stretch your budget beyond permissible limits. Personal finance management is always important if you want to keep yourself away from debt.    
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  9. individual 401k
    If you are self-employed and have a desire to shelter more of your income from taxes, then you may know about retirement plans for small-business owners such as SEP IRA and SIMPLE IRA.  But have you heard about Individual 401k (also known as Solo 401k)?
    Individual 401 k Plan is unique and designed explicitly for small, owner only businesses.   It offers powerful features that are not found in conventional IRA or 401(k).  It is a flexible and tax efficient retirement solution that will open up a world of investment opportunity with unlimited potential.  Use your retirement account to invest in Real Estate, Notes, Tax Deeds, Tax Liens and much more.   The IRS rules allow you to play the roles of both employer and employee in Individual 401k Plan, allowing you to contribute more to the plan than you could to a SEP IRA.
    Let’s take a look at some of the features of Individual 401k Plan that makes it so appealing and popular among self-employed business owners.

    Checkbook Control without Custodian Fees:

    In a Individual 401k Plan, you can serve as trustee of the Plan, which gives you “checkbook control” over the Plan’s assets.  Making an investment with a Individual 401k Plan is as easy as writing a check. Another significant benefit is that it does not require the participant to hire a bank or trust company to serve as trustee. This allows the participant to serve in the trustee role. This means that all assets of the Solo 401(k) trust are under the sole authority of the plan participant. Individual 401k allows you to eliminate the expenses and delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

    High Contribution Limits:

    Whereas an IRA only allows for a $5,000 annual contribution limit ($6,000 for those over age 50), the Individual 401k annual contribution limits are significantly higher: up to $55,500, that’s nearly 10 times more compared with an IRA!  Also, if your spouse received payments from the business, he or she can make contributions to the Plan.
    While you have the option to shelter large portion of your income, contributions to a Individual 401k plan are completely discretionary. You always have the option to try to contribute as much as legally possible, as well as having the option of reducing or even suspending plan contributions if necessary. In other words, you have the ability to make contributions to your Individual 401k Plan, but are not required to do so.

    Roth Sub-Account:

    With IRAs, those who earn high incomes are disallowed from contributing to a Roth IRA.  The Individual  01(k) plan contains a built-in Roth Sub-Account which gives you the ability make Roth type contributions (after tax) and is significantly greater than with an IRA without any income restrictions (for 2012 Roth Individual 401(k) maximum contribution is $22,500).   This allows you to grow your investments tax-free!

    Loan Feature:

    While an IRA offers no participant loan feature, the Individual 401(k) allows participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose at a low interest rate (the lowest interest rate is Prime which is 3.25% as of January 1, 2012). This offers plan participant the ability to access up to $50,000 for use for any purpose, including paying personal debt or funding a business.

    Exempt from UDFI:

    When an IRA buys real estate that is leveraged with mortgage financing, it creates Unrelated Debt Financed Income (“UDFI”) – a type of Unrelated Business Taxable Income (also known as “UBTI”) on which taxes must be paid. The UBTI tax is approximately 35%.  With a Individual  401k plan, you can use leverage without being subject to the UDFI rules and UBTI tax. This exemption provides significant tax advantages for using Individual 401k Plan versus an IRA to purchase leveraged real estate.

    Cost Effective Administration:

    Generally, Individual 401k plans are easy to operate. There is no annual filing requirement unless your plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ).
    To learn more about this powerful investment vehicle please click HERE or contact us at (949) 228-9393.  Remember, that no one will care more about your retirement account than you!
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  10. The Solo 401k Plan: Are There Rules and Regulations I Should Know First?
    Have you ever wondered how a Solo 401k plan works and what makes it different from the more traditional 401(k) plan?
    A Solo 401k plan is a plan that is designed for business owners that don’t have any other employees, besides themselves and their spouse. It’s not a new plan; in fact it is basically a traditional 401(k) plan covering only one person (and their spouse).
    The Solo 401k plan follows the same rules and regulations as any other types of 401(k) plans. However, the Solo 401k plan grew in popularity as a result of the EGTRRA tax law change that went into effect in 2002. The law made changes to the way salary deferred contributions are treated when calculating the maximum deduction limits for contributions to a 401(k) plan. The change was beneficial in that it afforded some people the opportunity to invest increased amounts of money towards their retirement.
    Self-Directed Solo 401k (also known as Individual K) is the ultimate qualified retirement plan for people who work for themselves without any full-time employees, other than their spouse – in any capacity or structure (e.g. corporation, sole proprietor, LLC, partnership, independent contractor, etc.). Solo 401k Plans allow a small business owner or self-employed individual the capability to use his or her retirement savings to invest into virtually limitless investment opportunities such as real estate, tax liens and tax deeds, businesses, precious metals, and more on their own without requiring custodian approval on a tax-free basis!
    Although, Solo 401k plans can engage in most types of investments, not all investments are allowed. There are some transactions that are considered “prohibited transactions” and can raise red flags that could lead to the Solo 401k being disqualified along with sever tax consequences.
    Therefore, it is recommended that you, as the investor, familiarize yourself with the Solo 401k prohibited transaction rules.  If you’re not sure how to invest in a Solo 401k plan properly, it is best to consult with the professionals at Sense Financial Services for further assistance: (949) 228-9393
    • IRC Section 4975 – Section 4975 – Tax On Prohibited Transactions
    • IRC Section 512 – Internal Revenue Code Provision which describes Unrelated Business Taxable Income
    • IRC Section 511 – Internal Revenue Code Provision imposing tax on Unrelated Business Income
    • IRC Section 513 – Internal Revenue Code Provision provision describing an unrelated trade or business
    • IRC Section 401 – Primary Internal Revenue Code provision relating to the 401(k) Plan
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