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February 12, 2024

Exploring the Benefits of a Self-Directed Solo 401(k) for Self-Employed Individuals

Key Points 

  • A Self-Directed Solo 401(k) is specifically designed for self-employed individuals with no full-time employees. It offers account holders the opportunity to invest in alternative assets like real estate and private businesses.
  • Broad Financial's Self-Directed Solo 401(k) provides "checkbook control," you to directly manage investments through an entity and dedicated checking account without custodian involvement. This feature allows for quicker and more agile investment decisions.
  • Setting up a Self-Directed Solo 401(k) with Broad Financial involves the creation of a trust and checking account. You can then fund the checking account through rollovers from other retirement accounts or direct contributions.
Happy entrepreneur working with a phone and laptop to explore the Benefits of a Self-Directed Solo 401(k) for Self-Employed Individuals

Are you self-employed and considering opening a retirement account? There is a retirement plan designed specifically for self-employed individuals with no full-time employees. It’s called a Solo 401(k).

If you see value in diversification and want to invest in alternative assets like real estate and private businesses, a Self-Directed Solo 401(k) can unlock many opportunities. Opening a Self-Directed Solo 401(k) with Broad Financial adds even more benefits by granting you “checkbook control” of your plan.

In this article, we'll discuss the process of investing with a Self-Directed Solo 401(k) and how it can potentially grow your retirement funds.

Solo 401(k)

Interested in a blossoming new company? You can invest in it with your Self-Directed Solo 401(k). Is there certain real estate you believe will appreciate in value? Your Self-Directed Solo 401(k) can invest in that too. You can "self-direct" your retirement funds toward almost any asset. And, with a Broad Financial account that grants checkbook control, you can write checks and pay bills from your retirement plan. This gives you more agility in making investment decisions.

Broad Financial's checkbook control provides you, the Self-Directed Solo 401(k) plan owner, allowing you to place your everyday investment transactions in real time.

With checkbook control, you can write a check or send a wire directly from a dedicated Self-Directed Solo 401(k) checking account to fund an investment. There's no time-consuming paperwork and delays, and you can jump on an investment the moment you see fit.

Self-Directed 401(k)s are similar to Self-Directed IRAs in that they both allow for alternative investments. However, a Solo 401(k) offers higher contribution limits. Checkbook control is possible with both accounts.

Self-Directed IRA Investors using their checkbook control capabilities to purchase real estate with their Self-Directed IRA.

In 2024, you can contribute up to $69,000 per year to a Solo 401(k) if you're under 50 and up to $76,500 if you're 50 or older. On the other hand, the contribution limit for IRAs is $7,000 when you're under 50, and it only rises to $8,000 for those 50 and older.

Note that you can contribute up to $23,000 of your salary (or $30,500 if you're 50 or older) to your Solo 401(k). A separate employer contribution depending on your salary or compensation, can possibly be added on top of this.

When you consider your tax bracket and income level, it's possible to contribute more to a Self-Directed Solo 401(k) than an IRA – leading you closer to potential financial freedom in retirement.

At Broad Financial, we make it easy to open and fund your plan in just a few steps:

When you're ready to set up your plan, contact the team at Broad Financial.  We'll guide you through the setup process, including establishing a trust that designates you as your Self-Directed Solo 401(k)’s trustee so you have checkbook control.

Next, you'll open a checking account in the name of your Solo 401(k)’s trust. You can use this account to deposit and withdraw funds from your retirement plan at any time.

Once your trust is established, it's time to fund your Self-Directed Solo 401(k)’s checking account. This can be done through a rollover from another retirement account, such as an IRA or old 401(k), or through a direct contribution.

That's it! You're ready to invest when your account is funded. Simply write a check or send a wire from your Solo 401(k)’s checking account.

a form with self-employment check box

A Self-Directed Solo 401(k) offers self-employed individuals the opportunity to invest in a wide range of assets for their retirement. With checkbook control, this investment vehicle becomes even more powerful, giving you the flexibility and freedom to act on investment decisions quickly.

Remember, it's never too early to start planning for your future. Contact Broad Financial and start building a more diverse retirement portfolio today.


Disclaimer: Broad Financial LLC does not provide legal, tax, or investment advice. Please consult with your tax or legal advisor before making investment decisions. 

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