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Time Is Running Out: 4 Reasons Why You Should Open a Self-Directed Solo 401(k) Before The End Of 2018

Picture of Thomas Young Thomas Young : December 27 2018

Self-Directed Solo 401(k)

There’s an old Chinese proverb that says the best time to plant a tree was 20 years ago. The second best time is now.

The same can be said for establishing a retirement account. And although 2018 is nearing an end, for many, the tax burden is still increasing.

Opening a Rocket Dollar Self-Directed Solo 401(k) before Dec. 31 allows retirement investors to take key tax deductions in 2018 that could save thousands of dollars off their federal tax liability.

Here are four reasons why it makes good sense to open a solo 401(k) before this year end – and why your retirement future will thank you when you do.

Unlocking The Power Of Your Retirement Money For Better Investments And Retirement Savings

A Self-Directed Solo 401(k) is a powerful retirement investment tool any time of the year; however, there are a number of benefits retirement investors can leverage if they open a Rocket Dollar individual retirement account before 12.31.

1. Reduced tax liability

Self-Directed Solo 401(k)s are perfect for independent contractors, freelancers, and self-employed or gig workers who have the bulk of their income reported as 1099 wages to the IRS. Contributions made to a solo 401(k) directly reduce taxable income; however, the plan must be set up before or on Dec. 31 for contributions to count against 2018 income. Contributions made until April 15 of 2019 count against 2018 income, but the plan must already be in place. Of course, you’ll reap the same benefits in 2019 and subsequent years – which is why self-directed retirement accounts are the ideal tax-deferred investment vehicle for freelancers and gig workers.

2. Rollover old accounts

Many of us have money in company-sponsored 401(k)s from past jobs. That money is mostly just sitting there doing little to increase your positive retirement future. In addition to making contributions in 2018 that can alleviate your year-end tax burden, it’s also a great time to consolidate all your 401(k) dollars to increase the investing power of your new Self-Directed Solo 401(k). It’s as simple as requesting a rollover form from your present plan custodian and submitting it with the information needed to create your new Rocket Dollar Self-Directed Solo 401(k). Once the new plan is established, all your retirement dollars will be compiled and wired into your Rocket Dollar account where you can begin making alternative investments.

3. 21st Century Diversification

Your investment options increase dramatically with a Self-Directed Solo 401(k) – you are no longer bound to invest in the limited options offered by your old plan provider. Instead, you now enjoy more control of your self-directed investment account and can invest in a wide range of asset classes. These include traditional public stock offerings and alternative assets such as real estate, cryptocurrencies, business startups and expansions, peer-to-peer loans, crowdfunding, and many other assets that aren’t tied to the stock market's performance. These assets allow for a strongly diversified retirement portfolio that’s better constructed to withstand market volatility and other economic pressures.

4. Get your retirement future in focus

In the day-to-day grind, it’s hard to cast an eye toward retirement age – especially if you’re under age 30 like I am. Likely you’re more concerned about getting to work on time, putting in solid, honest day's effort and meeting friends for burgers and brews afterward. However, it’s wise to spend time contemplating your retirement and building a vision of what that might look like. Just like that old Chinese proverb, the best time to start saving for retirement was 20 years ago. But establishing a solo 401(k) before 2018 ends also is a great time. The more time you have money invested in many different alternative assets from your Self-Directed Solo 401(k), the bigger your account can grow. It can completely change your vision of retirement.

Hit The Ground Running In 2019

A Self-Directed Solo 401(k) is an incredibly powerful investment vehicle that allows retirement investors to shake off the shackles of corporate-sponsored retirement plans that only allow limited investment options. Solo 401(k)s provide diversified investment opportunities that can generate outsized returns that can set you up for the best financial retirement outlook possible. Empower yourself now by opening a Rocket Dollar account and rolling over any old 401(k) funds, and enjoy a brighter retirement future.