Investsafe.com, a website by the investment firm Lamaute Capital, explains how the new Solo-Owner 401K plan works, so you can take money out of your retirement accounts and legally avoid or reduce your taxes.
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For most people investing their 401(k) or other retirement plan outside of the stock market is not an available option. Therefore, over half of the workers in the United States anxiously find their retirement financial security tied to the health or sickness of the stock market. 

However, beginning in 2002, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)opened a new set of retirement investment possibility to those investors who are self-employed, independent contractors, or have a small business.

As a result of a new tax law, small business owners with no employees or only a spouse as an employee can establish a Solo-Owner 401(k) plan. The law also allows them to roll over or transfer their IRAs, 401(k), 403(b), or other qualified retirement funds into their Solo-Owner 401(k) plan. Once the retirement funds are in the new plan the owner can take loans from the plan and use the loan money to invest outside of the stock market or for any other purpose.

Investsafe.com, a website by the investment firm Lamaute Capital, explains how the new Solo-Owner 401K plan works, so you can take money out of your retirement accounts and legally avoid or reduce your taxes.  

Last year, roughly 8 percent of working age Americans, or 13.5 million people, started businesses - According to the Global Entrepreneurship Monitor. When employees who participated in a 401k type retirement plan quit their jobs to start a business they are faced with three options: 1) leave their retirement savings in the plan of the old employer, 2) roll over their plan balance to qualified plan, or 3) receive a cash distribution.

“Many entrepreneurs would take a cash distribution” … says Daniel Lamaute, CEO of Lamaute Capital,…  “After all it’s a method of raising money this way is easy, requiring no credit check, explanation, or lengthy application. However, the ability to access your retirement money without paying taxes or penalties right away is very limited.  For any portion of your retirement distribution that is not rolled over, you can expect to pay taxes.  What's more, if you are under age 59 1/2 at the time you receive the retirement distribution, you will be hit with an additional tax penalty equal to 10% of any amount distributed and not rolled over.” 

Fortunately, with the new tax law one can avoid such taxes and penalties with a Solo-Owner 401(k) because a 401(k) loan is not treated as a distribution as long as you pay it back on time. Small business owners and the self-employed can borrow the lesser of $50,000 or 50% of their retirement account balance and use the loan proceeds for almost any reason including investments in a business, real estate, or just because they need cash. 

To learn more about Solo Owner 401 (k) plans, visit http://www.investsafe.com/financing.html

 
 

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