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Self Directed IRA Accounts - 401(k)

The Basics of 401(k)

A 401(k) is a profit sharing plan for businesses. This type of plan offers the highest contribution amounts available and offers employers flexibility in how the plan is structured. 401(k) plans are employer plans that can be written, to some extent, according to the employer's specifications. Employer choices include compensation types, Traditional and/or Roth designation, age groups, matching, age participation limits, etc. Individual 401(k) participants take advantage of tax deferred or tax free savings for retirement. A 401(k) withdrawal (distribution) can be made without penalty after age 59.5. Required minimum distributions must be taken after age 70.5.

Some 401(k) plans are written such that the participant can elect "alternative" assets like real estate, gold, private equity, etc. and some are not. It depends on what the plan documents allow. If you have a question about which assets your existing 401(k) plan allows, ask the administrator or the trustee. 401(k) plans can be altered by the employer and trustee. If you are a participant in a plan that does not allow the assets that you would like to have your retirement savings in, you may be able to prevail upon your employer to change the plan. If not, a 401(k) plan participant can perform a rollover into a number of other retirement accounts such as a Traditional IRA or Roth IRA (rollovers to a Roth may have a tax event associated with it) if either they are no longer employed at the company that sponsored the plan or the plan allows an "in-service" distribution.

Rolling Over Your 401(k) – Keep the tax benefits and Invest in Alternative Assets

If you have retirement savings in a 401(k) at an employer for whom you no longer work or if that plan offers an “in-service distribution”, you can roll over those funds to a self directed IRA without a tax event. You get to keep the tax benefits, and you free that money up to invest in all the asset types that New Direction services. Many tax-advantaged plans are “portable” once the participant is no longer working for the company. Your 403(b), 457(b), defined benefit plan, money purchase plan, or other plan may also be allowed to roll over to an IRA without penalty or taxes. Feel free to call us for more information.

The Basics Of An Individual 401(k)

An Individual 401(k) plan is simply a 401(k) plan for companies with no employees. Individual 401(k) plans have the same options available to them as larger 401(k) plans. However, with an Individual 401(k), the employer, trustee, and participant are usually the same person.

For self-employed persons or companies with no qualifying employees, an Individual 401(k) plan allows the employer/participant high annual contribution limits as well as a high degree of flexibility and convenience when it comes to acquiring assets.

What Are the Benefits of An Individual 401(k)

  • 401(k) provides employers flexibility and customization depending on the needs of the company and its employees. (In the case of an Individual 401(k), the employer and participant is the same person.)
  • Individual 401(k) provides high contribution limits because there are multiple ways to contribute.
  • Tax benefits for the Individual 401(k) participant and employer.
  • Individual 401(k) plan can be modified as needed.
  • Individual 401(k)'s can be used to invest in real estate, precious metals, private equity, publicly traded securities and more.
  • You can make contributions even if you are over 70.5 (Must be employed).
  • It can be a part of a generational wealth plan.
  • If you leave your employer, you are allowed a 401(k) to IRA rollover. Similarly, you are allowed an IRA to 401(k) rollover.

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Self Directed IRA educational videos - Top 7 Ways To Benefit From A Self-Employed Individual(K) Plan

Top 7 Ways To Benefit From A Self-Employed Individual(K) Plan

Because of their high contribution limit and Roth component, 401(k)s have become a very popular retirement plan for self employed business owners. Join New Direction IRA as we reveal seven great benefits that a self directed individual(k) affords the plan participant. Remember, the deadline for establishing a new plan and contribution eligibility is December 31st. Now is a perfect time to learn why an individual(k) could be the perfect plan for you.

Individual 401(k) Eligibility And Other Rules

  • To be eligible for an Individual 401(k), you must be at or older than the age required by the employer, even if you are a full-time employee and receive other benefits. Eligibility rules change from company to company as each employer is able to customize the 401(k) plan.
  • The Individual 401(k) is available for any sole proprietorship, partnership, limited liability corporation (LLC), or incorporated business, including subchapter "S" Corporation.
  • The Individual 401(k) is used by owner-only and small businesses with no employees or if the employees fall outside of certain guidelines.

New Direction IRA Offers

1. Plan Documents Only - Download plan adoption documents
The Individual 401(k) plan documents are rented on an annual basis from New Direction IRA. The trustee of the plan decides which options within the plan to allow and New Direction provides the plan documents. The trustee is in charge of all bookkeeping and reporting for the plan

  • New Direction IRA provides the required documents to establish the plan.
  • You perform your own investment record-keeping.
  • This option is only available with the Individual 401(k) Plan.

2. Record Keeping Only - Download Record Keeping Documents
The trustee has an Individual 401(k) plan document and need record keeping done for the investments. An account is opened at New Direction IRA to record and update any investments the plan makes. New Direction does not provide any plan documents.

  • You have an approved plan document.
  • New Direction IRA provides the required record-keeping on self directed investments.
  • This option is available with plan types such as a traditional 401(k), Roth 401(k), profit sharing plans, and employer stock ownership plans.

3. Full Service Model - Download Full Service Documents
The trustee rents the Individual 401(k) plan document from New Direction IRA and also has New Direction complete the bookkeeping and reporting for the plan. This option combines the two plans described above.

  • New Direction IRA provides the required documents to establish the plan.
  • New Direction IRA provides the record-keeping services on your self directed investments.
  • This option is only available with the Individual 401(k) Plan.

Learn more about Individual 401(k) Contribution and Individual 401(k) Distribution.

  1. Its easy to invest for retirement with a 401(k)
  2. Open a 401(k) account with New Direction IRA
  3. Obtain a Tax Identification Number (TIN) for your plan. New Direction can assist you in obtaining a TIN.
  4. Put money in the account by rolling money over from an old 401(k), transferring from another IRA, and/or making a contribution. Buy real estate, precious metals, private equity, loans, and more.

For more detailed information, feel free to contact us or visit IRS.gov.

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