Solo Retirement Plans

Solo is a custodian, who takes care of investing money on behalf of a self employed individual.

The Solo retirement plan was infact designed for self employed individuals, whose business does not employ any full time employees. These plans are known as qualified plans, because anyone can operate as a trustee.

This means that the investor, or in other words the self employed person can also be the trustee, and take care of the investment decisions on his retirement plan, himself. This makes the Solo401(k) plans, simpler and cheaper than their counterparts. To give an example, let us say that our self employed individual Harry, is serving the role of trustee, employer, participant, employee and administrator all in one. As employer he invests the maximum amount in the plan. Then Jane, Harry’s wife as employee can also invest herself another $46000.

There are however potential compliance and record maintaining problems with this retirement plan. Here is how you should avoid them:

• The only method with which this plan is controlled, is through the completion of a single form called 5500-EZ. Furthermore this form is only required when the total assets saved in the plan exceed the sum of 250,000 dollars.

• Legal compliance on this plan is not complicated to achieve. All investors and account holders should avoid making illicit transactions. The responsibility of this, lies solely on yourself.

As we have seen, the solo plan provides a very simple and straight forward structure, since a person can serve all the roles, thus making the decision making process less time consuming and complicated. This plan also allows you to invest in various investment options such as precious metals and foreign shares, where investment managers would normally refuse to invest.