Ever wondered if you might be able to benefit from a self administered 401k plan?
Transcript: Hi, I’m John Park, with PGI Self-Directed, and contributor to BawldGuy Talking. Today we’re going to do a short video post on self-administered 401(k) plans – what are they? You may have heard of them, you may not have heard of them, but all of you have heard of 401(k) plans. So similar to a 401(k) plan that you may have participated with an employer, where you’re actually taking money from your income, contributing it into your 401(k) plan for your retirement benefit, the self-administered 401(k) plan is specifically intended for an individual who is self-employed, or who has a side business, so they can have a 401(k) plan over and above what they may participate in at their W2 position. But right now, we’re just going to focus on that 401(k) plan that is for the self-employed person, and has no other employees other than potentially a spouse, because that’s very key to remember. So what does a self-administered 401(k) plan do for you? Let’s go back to what the IRS says you basically have to qualify for in order to be, in their minds, considered self-employed. One is you have to be either a sole proprietorship that conducts a trade or a business, a member of a partnership, an independent contractor, or otherwise in business for yourself. Those are pretty straightforward, very simple examples of what it’s like to be self-employed. But you at the end of the day, if you’re self-employed, you can set up a self-administered 401(k) plan where you are the trustee of that plan. Now, the power of that means is you’re used to plans before where your funds are tied up with some financial services company, and your investment options are limited to stocks, bonds, and mutual funds. With a self-administered 401(k), it’s like unlocking the door to the investment house. You can now invest in any asset class that’s permitted under IRS rules. Of course, there’s IRS rules that need to be followed with regard to your plan, but now you’re going to be able to invest in a plethora of assets, including things such as discounted notes. So bottom line is with the self-administered 401(k), you’re going to have the freedom and the flexibility to make contributions, to do rollovers into the plan, and otherwise to serve as that trustee and make what you feel are the best investment choices for the plan, as long as you’re following IRS rules. So again, this is John Park, PGI Self-Directed. Look forward to visiting with you on the next post.