October 6, 2025 • 23 mins
Take control of your retirement with a Solo 401(k): https://kkoslawyers.com/services/solo-401k-set-up/?utm_source=buzzsprout&utm_medium=description-link&utm_content=solo-401k-p1-benefits&utm_campaign=main-street-business-podcast
Are you overlooking one of the most powerful retirement strategies available to entrepreneurs and small business owners? In this episode of the Main Street Business Podcast, Mark J. Kohler and Mat Sorensen take a deep dive into the Solo 401(k) — explaining exactly what it is, who qualifies, and how it can dramatically improve your retirement savings and tax strategy. If you’re self-employed, a freelancer, or running a small business, this plan could be a game-changer for your financial future.
Unlike traditional retirement accounts, the Solo 401(k) comes with higher contribution limits, flexible investment options, and unique tax advantages that put you in control. Mark and Mat walk you through how the plan works, the rules you need to know, and why so many entrepreneurs are using it to invest not only in the stock market, but also in real estate, private companies, and alternative assets. They’ll also cover common misconceptions, key mistakes to avoid, and practical strategies to maximize the benefits of this plan.
Whether you’re just getting started with retirement planning or looking for ways to reduce your tax burden while growing wealth, this episode breaks it all down in plain, actionable steps. By the end, you’ll understand why the Solo 401(k) stands out compared to SEP IRAs and other options — and how to know if you qualify.
If you’re serious about building wealth, saving taxes, and gaining more control over your financial future, this is an episode you can’t afford to miss!
You’ll learn:
- How a Solo 401(k) lets you save for retirement using any small business or side hustle income — even alongside a day job 401(k) or IRA
- The major tax and contribution advantages that make Solo 401(k)s one of the most flexible retirement plans for entrepreneurs
- How to borrow from your Solo 401(k) and pay yourself back with tax-free interest
- Why Solo 401(k)s offer strong asset protection and rollover options from old retirement accounts
- The power of self-directing your Solo 401(k) into real estate, small businesses, and other alternative investments
Get a comprehensive tax consultation with one of our Main Street tax lawyers that can build a tax strategy plan with an affordable consultation that will leave you speechless!!
Here’s the link - https://kkoslawyers.com/services/comprehensive-bus-tax-consult/?utm_source=buzzsprout&utm_medium=description&utm_content=595-solo-401k-p1-benefits&utm_campaign=main-street-business-podcast
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:00):
You are allowed to have a solo 401k with any type
of small business revenue.
So if you have a side hustle,maybe you're driving Uber.
You can find a solo 401k withyour Uber revenue.
You're selling something online,you're doing a small service,
you run a janitorial business inthe evenings with your family.
I don't know.
Any type of business incomeyou're generating, you are
(00:20):
allowed to have a solo 401k ontop of a work 401k and on top of
a Roth.
SPEAKER_01 (00:26):
But you can also roll over existing retirement
account dollars.
So if I've got an old employer401k with traditional 401k
dollars, even Roth 401k dollars,I can roll that into my solo
401k.
The gateway to entry is very,very low.
SPEAKER_00 (00:46):
Welcome to the Main Street Business Podcast.
My name is Mark Kohler.
I'm here with my incrediblepodcast partner, Matt Sorensen,
who I just learned from everytime we go live on our podcast.
And today we are starting partone, which means we have part
two.
And today is about all the goodstuff.
(01:09):
And do I qualify?
Part two is gonna be how do Iimplement this and make it
happen and make it even betterand take shoot for the stars.
So I think we're gonna, this isso powerful, so important.
SPEAKER_01 (01:22):
Yeah, the solo 401k is the number one retirement
account you should know about ifyou're self-employed.
And if you're someone who'sself-employed, we know we run
across those clients all thetime, real estate agents.
You could be the doctor, thedentist, the consultant, the
Uber driver, I don't care whatyou are, okay?
You're self-employed, but youhave no other employees.
So the government said, hey, weshould let these people have
(01:43):
their own 401k too.
It's not just for big companiesthat have all these employees.
These self-employed people, thisgig economy that's got so many
people in it now, let's let themhave their own 401k where they
can put 70 grand a year in it,right?
We know IRAs for individuals,you can put 7,000 a year in it,
but we can put 10 times as muchof that into a solo 401k.
SPEAKER_00 (02:04):
Well, and I think we need to start with as we go into
these benefits, is let's debunka few myths.
May we?
Can I?
I just want to say a few things.
Number one, you can have a work401 if you have a day job and a
solo 401k.
Number two, your spouse couldhave a day job and participate
(02:26):
in your solo 401k in your smallbusiness.
You can have a IRA and a solo401k and a work 401k.
You can have all three.
Nothing wrong with that.
And number four, I'm I'm see ifyou can come up with format.
I'm gonna do number four, man.
SPEAKER_01 (02:43):
I got some more.
SPEAKER_00 (02:44):
You can invest your solo 401k in anything you want.
It does not have to be in WallStreet marketable securities.
So you the those are I thinkthose are important.
SPEAKER_01 (02:57):
I'll just that was the one I wanted to make sure we
got off the table is like yoursolo 401k can buy real estate.
It can invest in a privatecompany, it could buy precious
metals, it could buy crypto,okay?
These are many of these assetsthat our clients are buying
every day using solo 401k.
And so we give you that option.
This is not just Wall Street putmore money in Wall Street, okay?
You can do that.
We're not against that, but alot of self-employed
(03:19):
individuals, they might be inthe real estate industry.
They like real estate, theymight be into crypto investing
personally.
Did you know your solo K couldbuy crypto?
So we can help you do that.
So you just know as we'retalking about building wealth in
this solo 401k account, right?
And remember, this is aretirement account.
Long-term wealth building, youcan access at 59 and a half.
But as we're talking aboutbuilding wealth, we want you to
invest in the assets you knowand believe in they're going to
(03:41):
get a great return.
One thing I want to note about,too, when we're talking about a
solo 401k, you can do Rothaccounts, all right?
The solo 401k can be entirelyRoth dollars, the whole 70,000.
Old solo 401k and 401k rulesused to be the only contribution
into a solo 401k was theemployee contribution that could
(04:01):
be Roth.
And any of the company match orany of these other dollars that
go into the mix had to betraditional dollars.
That changed a couple years ago.
You could do 100% Roth now on asolo K.
So that 70K max could be allRoth dollars.
SPEAKER_00 (04:15):
Yeah, no, awesome.
And I it what's funny is a lotof the myths turn into the
benefits.
And I think a lot of peoplerealize, hold it, I thought that
wasn't true.
Yeah, that's one of the benefitsof the solo.
So I'll just point out one otherpotential myth that I hear a lot
of times is well, I'm too old.
Or once I'm, you know, I get ridof my business or whatever, I I
(04:41):
don't qualify or whatever.
And so we're gonna be talkingabout some of those um
misconceptions about whether ornot you can participate in one
as we develop this show today.
So uh as we talk about thesebenefits, and again, like I
said, sometimes you're you'reable to flip a myth into a
(05:01):
benefit, uh, and we start goingthrough this, and maybe we can
come up with a list of benefits.
I'm gonna start backtrackingthrough what I thought were some
of the myths.
And the one is that you areallowed to have a solo 401k with
any type of small businessrevenue.
So if you have a side hustle,maybe you're driving Uber.
(05:23):
You can find a solo 401k withyour Uber revenue.
You're selling something online,you're doing a small service,
you run a janitorial business inthe evenings with your family.
I don't know.
Any type of business incomeyou're generating, you are
allowed to have a solo 401k ontop of a work 401k and on top of
a Roth.
So I think that's a majorbenefit of the solo 401k, is
(05:47):
that you the the entry or thethe gateway to entry is very,
very low.
SPEAKER_01 (05:54):
Yeah, and I think this is the last client I was
just talking to about a solo Kyesterday who was a real estate
agent, right?
And she uses her solo K toinvest in real estate.
And this is the first retirementaccount she had had, she'd heard
of SEP IRAs, and everyone'slike, oh, you're a self-employed
person, you should do a SEP IRA.
And we set her up with a solo Ka while ago, and I just kind of
going back on how it was going.
(06:16):
And but this solo 401k is is forthose self-employed persons, and
that, like we said, we itdoesn't matter the type of
business it is, but there is oneimportant distinction here you
got to know.
This is not investment income.
So a lot of times we get realestate investors that say, well,
Matt, I go out, I got somerental properties.
Can my LLC that owns my rentals,can that adopt a solo 401k?
(06:38):
Because the business adopts a401k.
All right, and I want you tothink about, I'm trying to teach
two points here.
But think of like Microsoft,okay?
It has a 401k plan.
It's the Microsoft 401 plan, andthere's tens of thousands of
employees that have an accountin the Microsoft 401k plan.
Like, you know, we have a KQSLawyers 401k, directed IRAR
(07:00):
company has a 401k, right?
And each employee has an accountin the 401k.
When you have a solo K, there'sstill a business that adopts the
401k plan for the benefit of itsemployee, which may just be you
or your spouse if they'reworking in it, or maybe a
business partner too.
But but that's what it is.
There's still a plan adopted bythe company.
(07:20):
Now that company must be onethat provides goods or services.
It can't be one that has rentalincome or investment income.
Okay, that is not qualifying.
So that's the first thing isthis must be an operating
business.
Think of small business, bigbusiness, side business, I don't
care what it is, but it's umit's selling goods or services
typically, it's in the operatingincome.
As you guys know, our trifectathat we talked about.
(07:41):
This is left side on thetrifecta businesses.
SPEAKER_00 (07:44):
Okay, so as we kind of deal with these two pieces of
the equation of the benefits ofthe solo, and do I qualify uh
again, everything relates toeverything here, that the
barrier to entry is very low.
You just have to have businessincome.
So that's one of thequalifications is having
business income, and it's alsoone of the benefits is that I
(08:08):
can use that solo 401k againstside hustle income on top of a
Roth and on top of a day job401k.
Now, I one of the other benefitsI like about the solo 401k is
that you can borrow against it.
It's not like an IRA where Ihave to wait till I'm 59 and a
half.
Um, I I can start borrowingagainst my own 401k for an
(08:32):
opportunity or a problem, and Ican borrow up to 50% or$50,000,
whichever's less.
And what's nice about that isyou're paying interest back to
yourself tax-free.
So that interest payment, as youpay back that 401k loan, goes
all back into that 401k bucketthat continues to grow and
(08:52):
snowball.
So I love that borrowingprovision.
What's another benefit you like,Matt?
SPEAKER_01 (08:57):
Yeah, and I'd say that borrowing provision, we've
seen a lot of people use that.
Let's say they're starting up anew business and they're rolling
an old employer 401k, and sothey set up the solo K, they
receive those old 401k dollars,or maybe an old IRA that's been
laying around that they justroll over into the solo K, then
they do this loan to help withsome startup expenses in the
business.
It's not a distribution, it'snot taxable.
(09:18):
You got that five years to payback that loan.
We've seen people use thatparticipant loan in the solo K
to pay off high interest debt.
Um, it's a good strategy.
Um, so uh I love that one.
I don't even think about thatone.
So um glad to do that.
SPEAKER_00 (09:31):
And I think you really just highlighted one of
the other benefits is you canroll over into your solo 401k um
old IRA money or old 401k.
Why don't you explain that alittle bit more?
Because you started to touch onthat.
SPEAKER_01 (09:44):
Yeah, so in a solo 401k, you can put new
contributions in.
We talked about that 70,000, andwe'll hit that in part two on
how you calculate that andactually do that, the mechanics
of it.
But um but you can also rollover existing retirement account
dollars.
So if I got an old employer 401kwith traditional 401k dollars,
even Roth 401k dollars, I canroll that into my solo 401k.
(10:08):
Or let's say that you have atraditional IRA at you know, TD
Ameritrade, you can transferthat, roll that over into the
solo 401k in a traditionalaccount.
And so um, so we can getexisting retirement account
dollars into the solo 401k aswell.
SPEAKER_00 (10:25):
I love it.
I'm working a master list here,so everybody, you have to stay
tuned until the end of thispodcast because I'm gonna rattle
all these benefits off.
Um, the next one that I love isthat the 401k is asset
protected.
Now, if you're a bad enoughindividual or your the creditors
have a large enough claimagainst you, the solo 401k, like
(10:48):
an IRA, it's gonna be based onyour state of how much that 401k
is protected from a creditor,but it's pretty significant.
And so this is a major point inthat there's really only two
people that can get at your 401.
The IRS, if you don't pay yourtax bills, or if you're in a
divorce, you're gonna typicallyhave to split that 401 with your
ex-husband or ex-wife to keepthe an equitable divorce
(11:11):
happening.
Now, again, a lot can happen ina divorce as well.
But the point is, creditorscan't just dip into your 401k if
you owe someone a bad debt.
Car accident, a business dealgone bad, anything like that.
It takes a lot to break intothose 401ks.
We think of the OJ Simpsonstory.
I've written a lot about that.
Now, that was a planned 401k,kind of a group 401k, which is
(11:35):
going to have maybe a littlemore significant benefits, but
the solar 401k is no sloucheither.
They it really can be qualifiedas an asset protection vehicle.
SPEAKER_01 (11:45):
Yeah, and what Mark was talking about there with the
OJ Simpson, just on this assetprotection to illustrate the
point is, right, like not guiltycriminally, but got held liable
civilly and had like a$30million judgment against him.
Well, the Goldman family, whoreceived that judgment, could
never collect on it becauseeventually his income and that
he ended up living off of afterhe went broke was his NFL
(12:06):
pension and retirement account,which they could not take.
They couldn't seize.
Yet he was living off ofhundreds of thousands of dollars
coming out of this thing everyyear.
And so, but that's how yourretirement account is.
It's this asset that isvirtually impossible for a
creditor to attach and get.
So um, so we've seen a lot ofclients that have asset
protection risks.
We see physicians or contractorsor people that are like, we just
(12:29):
in our space, we just get suedevery once in a while, that are
like, that's a huge sellingpoint and value point, is just
that asset protection uhbenefit.
SPEAKER_00 (12:37):
Well, now moving along, one of the benefit
benefits we already highlighted,but I want to bring it to bear
with the second uh they're kindof go hand in hand, is Matt
already gave the big reveal, orI guess I did too, that you can
self-direct your 401k.
You can invest it in other smallbusinesses, real estate, do
lending out of it.
Oh, beautiful.
(12:58):
The concept of self-directing.
Please get over to our sisterpodcast, the directed IRA
podcast, where we talk about theself-directed ability and all of
the options and really not a lotof rules there either.
There's a lot of opportunity.
So that's one of our benefitshere on the list.
But the sister to that is youget to self-trustee your solo
(13:20):
401k.
Yeah.
And and and really control thecheckbook, if you will, for the
401.
So you can uh be in charge ofyour 401 without having to pay
big fees to a third-partyadministrator.
Would you agree?
How would you explain that,Matt?
SPEAKER_01 (13:34):
Yeah, so when you put money in that solo 401k,
right?
Let's say you put a you rollover some funds or there's a
transfer or you put your newcontributions in, right?
You're gonna want to go andinvest those.
Now we've talked about realestate.
Like someone might buy a singlefamily rental, right?
They may go do private moneylending out of it, where they're
lending money out at 12%interest in two points.
(13:55):
Well, if you think aboutself-directing, and if you're
new to this, your custodianneeds to handle that.
And that's what we do at ourcompany directed diary.
Well, we'll do custody of theseactual accounts.
But if you're like, can we justput that money in a checking
account and I'll just write thechecks out for the investments
I'm making and I'll hold it inthe name of the 401k, but I'll
have this checkbook control togo make the investments and
(14:15):
receive the income, pay anyexpenses on it.
Real estate would be a commonone.
That's what that self-trusteeand that checkbook control is.
So in our solo K docs, you canbe trustee of the Solo 401k.
And our 401k documents, by theway, are pre-approved by the
IRS.
They're fully open to any assetallowed by law, whether that's
crypto or real estate orprecious metals or small
(14:36):
business notes, whatever you'redoing, you can do those with our
solo 401k plan documents.
As the trustee, which means youcan sign on the stuff and even
have a checkbook to go do this.
Now, our lawyers at KKOS Lawyerswill do a consult when you set
this up.
We're going to explain how thisworks.
Make sure it works in yoursituation.
Go over the things you might bethinking about investing in and
(14:57):
how that might work and answeryour questions.
So just know this is not like ahit the easy button and you just
get some document.
We are here to help you get itset up, make sure it's
structured properly for yourbusiness and your situation, and
answer the inevitable questionsthat come as you're new to this,
and you get a real tax lawyerhelping you along in the way.
SPEAKER_00 (15:14):
Oh, I love it.
I mean, the list continues togrow every time you start
speaking, Matt.
Next benefit that I'd like isthat when you pay to set up your
solo 401k, it's a tax deduction.
It is a tax write-off to meetwith your lawyer, get this done,
and KCOS Lawyers is going towalk you through all the
provisions of what you shouldlook out for or not and tailor
(15:37):
it to your situation.
And we have a special every yearin the month of October to help
you get this done because it'sgot to be a year-in strategy.
So, I mean, dude, yeah, wealmost forgot the tax write-off,
right?
SPEAKER_01 (15:50):
I know.
How could we forget?
I mean, we always love a goodtax write-off.
Who doesn't?
Plus, there's also a tax creditavailable too, so we'll have
more detail on that.
Um, and that if you do some, youhave to do a couple extra step
there to get that credit, buteven works on the solo 401ks.
So a lot of incentives to getthat set up and start saving for
retirement.
Um, let alone, you know, becausewe talk about year-end tax
(16:14):
planning.
If you're trying to get taxwrite-offs today and do
traditional dollars, like that'sa big ticket item that saves you
taxes today.
If you're looking at theseyear-end and being like, I'm I
had a great year this year, Ineed some tax deductions.
Well, we're talking about thecontributions going in as being
a tax deduction too, if you dotraditional dollars.
SPEAKER_00 (16:33):
Well, and I want to bring that up too, as probably
uh the next benefit that we'regonna uh really dive deep into
in part two of this series isthe contribution amounts.
There's a lot of flexibilitythere.
You might put in Roth money, youmight put in traditional money,
you might have your companymatch, you might do an after-tax
(16:54):
contribution to even get more inthere.
Um you might set up a 401kcontribution amount for your
spouse.
Your kids can even be in thesolo 401k.
It includes your spouse andchildren.
So all of these contributionamounts amount to flexibility.
It kind of gives you a lot ofplanning opportunity, which I
(17:15):
put down here is uh one of ourkey benefits are these high
contribution amounts and theflexibility in the contribution
amount.
SPEAKER_01 (17:23):
All right, now another benefit to this, and
again, we're thinking long-termwealth building and also legacy
building here, is thisretirement account when you pass
away, this solo 401k, can betransitioned over to your
surviving spouse if you haveone, or over to your kids as an
inherited IRA and continue tobeing invested for up to 10
years in a tax-advantagedmanner.
(17:45):
What this was Roth dollars,you're gonna get another 10
years of tax-free growth.
And so retirement accountsbecome one of the best assets to
inherit, because whatever assetsyou get in there, you can
continue to keep growing them,and then you can pull them out
whenever you want in that10-year window, but you just
have to pull it out within 10.
So, particularly if this is aRoth solo 401k, very powerful
(18:06):
strategy and something toinherit, a great way to pass
down wealth and help build alegacy for your family.
All right, now one other lastbenefit here, because I know we
talked about qualifying for asolo 401k.
You got to be self-employed witha business, selling goods or
services type thing, you know,ordinary income.
And you can't have any otheremployees, right?
That's the solo 401k where youfit.
(18:26):
We talked about that real estateinvestor, and this is a client
we get a lot.
We have a lot of real estateinvestor clients that might have
rental properties, for example,and they've got an LLC, and it's
got maybe, or they've got 10LLCs and 10 different
properties, for example.
And they might be like, Well,how I want to do a solo K.
I've got great cash flow, greatincome.
I want to be building thistax-free bucket, maybe doing a
Raw solo K, whatever yourmotivation is.
(18:47):
How do I do that?
How do I do that?
Well, that's the side door solo401k.
So what we will do there is weset up a management company.
This could be Schedule C soleproprietorship.
Um, you know, you could do an Scorporation, probably not,
probably just doing a Schedule Csole proprietorship.
This could be an LLC, maybe not.
I probably just do an LLC ifyou're in this scenario here.
(19:10):
You're gonna pay a managementfee from the rental real estate
entities that you're taking anexpense for over there, and
you're gonna pick it up in themanagement entity.
Now, generally, you never pushrental income over to management
fee income and ordinary incomebecause you're picking up
self-employment tax, right?
But if we're gonna use it tofund a retirement account to
(19:30):
build a bucket of tax advantagedollars, whether those are Roth
or traditional, we want to dothat and think about that.
So that's the side door solo Kwhere you can qualify is by
doing a management entity.
You need enough assets over hereto management on your right side
of the trifecta here.
And I'm for those of youlistening on the podcast, the
hand gestures I know are totallyworthless, but you can imagine,
(19:51):
right?
We got the rentals and thatexpense you're picking up over
there, but you pick it up asincome over here in your
management entity, and we'reusing that to adopt the solo K
and then make the contributionsthere.
SPEAKER_00 (20:03):
All right.
Well, gosh, I love that one too.
All right, I'm gonna do my besthere to summarize these top 10
benefits of the solo 401k.
Number one, I can have a day joband even a Roth IRA and a solo
401k.
The solo 401k can be stacked ontop of these other retirement
accounts for maximum benefit andgrowth.
(20:25):
Number two, I can borrow againstthe solo 401k up to 50% or
$50,000 and pay interest back tomy own account.
Three, I can have complete assetprotection for almost any
possible lawsuit with this solo401k, far better than an LLC or
some sort of irrevocable trust.
The solo 401k are time tested.
(20:47):
Number four, I can roll overmoney from an old IRA or an old
401k to fund the solo on top ofnew contributions.
I get to choose.
Number five, I can self-directmy solo 401k and creative
investments and all the types ofuh self-directed assets that we
(21:08):
talk about on our sisterpodcast.
And number six, I can evenself-trustee the 401 with its
own checkbook.
I can create LLCs with my 401kto self-direct and have more
control.
Number seven, I have flexiblecontribution amounts that um can
be create tax deductions or beRoth structured and create
(21:31):
massive write-offs with year-endplanning if I feel so inclined.
And number eight, I can put itas part of my estate plan.
The 401k can roll out into theform of an IRA for my spouse or
children upon my passing.
Number nine, I get a taxdeduction for any consultations
or setup fees with my lawyer andmaybe even a possible tax
(21:54):
credit.
Not to mention, we have aspecial this month in October.
Make sure you look down in thedescription below for that
special.
And then number 10, I can evenmanufacture a solo 401k out of
passive income with my realestate portfolio.
These solo 401ks are freakingabsolutely amazing.
SPEAKER_01 (22:15):
Wow, the top 10.
I there's probably more benefitsto get into, and everybody's
situation is unique and howyou're gonna use it and how
these benefits are gonna affectyou.
Um, so make sure you get over tokquslawyers.com, take advantage
of the special, get it set up.
Don't wait till year end.
If you want to make 2025contributions and you want to be
able to maximize though those,you need the solo 401k set up in
(22:37):
2025.
All right.
So let's get some time, let'sgive you some time so you're not
rushing at year end.
Let you enjoy the holidays,okay?
We want you to enjoy theholidays and not be doing this
last-minute planning.
Get in early to get someconsultation on this if this is
something that could work foryou.
Um, and our attorneys would behappy to help you walk you
through this.
It's included in the fee to getthis set up.
So um, and if you love thispodcast, I'll just say that too.
(22:59):
Please like it, share it withyour friends and family,
subscribe to the podcast ifyou're not already.
We've got so many episodes hereto help you save on taxes,
protect your assets, and buildwealth.
Um we'll be back next time foranother incredible episode of
the Major Business Podcast.
We'll see you then.
See you then.
You are allowed to have a solo 401k with any type
of small business revenue.
So if you have a side hustle,maybe you're driving Uber.
You can find a solo 401k withyour Uber revenue.
You're selling something online,you're doing a small service,
you run a janitorial business inthe evenings with your family.
I don't know.
Any type of business incomeyou're generating, you are
(00:20):
allowed to have a solo 401k ontop of a work 401k and on top of
a Roth.
SPEAKER_01 (00:26):
But you can also roll over existing retirement
account dollars.
So if I've got an old employer401k with traditional 401k
dollars, even Roth 401k dollars,I can roll that into my solo
401k.
The gateway to entry is very,very low.
SPEAKER_00 (00:46):
Welcome to the Main Street Business Podcast.
My name is Mark Kohler.
I'm here with my incrediblepodcast partner, Matt Sorensen,
who I just learned from everytime we go live on our podcast.
And today we are starting partone, which means we have part
two.
And today is about all the goodstuff.
(01:09):
And do I qualify?
Part two is gonna be how do Iimplement this and make it
happen and make it even betterand take shoot for the stars.
So I think we're gonna, this isso powerful, so important.
SPEAKER_01 (01:22):
Yeah, the solo 401k is the number one retirement
account you should know about ifyou're self-employed.
And if you're someone who'sself-employed, we know we run
across those clients all thetime, real estate agents.
You could be the doctor, thedentist, the consultant, the
Uber driver, I don't care whatyou are, okay?
You're self-employed, but youhave no other employees.
So the government said, hey, weshould let these people have
(01:43):
their own 401k too.
It's not just for big companiesthat have all these employees.
These self-employed people, thisgig economy that's got so many
people in it now, let's let themhave their own 401k where they
can put 70 grand a year in it,right?
We know IRAs for individuals,you can put 7,000 a year in it,
but we can put 10 times as muchof that into a solo 401k.
SPEAKER_00 (02:04):
Well, and I think we need to start with as we go into
these benefits, is let's debunka few myths.
May we?
Can I?
I just want to say a few things.
Number one, you can have a work401 if you have a day job and a
solo 401k.
Number two, your spouse couldhave a day job and participate
(02:26):
in your solo 401k in your smallbusiness.
You can have a IRA and a solo401k and a work 401k.
You can have all three.
Nothing wrong with that.
And number four, I'm I'm see ifyou can come up with format.
I'm gonna do number four, man.
SPEAKER_01 (02:43):
I got some more.
SPEAKER_00 (02:44):
You can invest your solo 401k in anything you want.
It does not have to be in WallStreet marketable securities.
So you the those are I thinkthose are important.
SPEAKER_01 (02:57):
I'll just that was the one I wanted to make sure we
got off the table is like yoursolo 401k can buy real estate.
It can invest in a privatecompany, it could buy precious
metals, it could buy crypto,okay?
These are many of these assetsthat our clients are buying
every day using solo 401k.
And so we give you that option.
This is not just Wall Street putmore money in Wall Street, okay?
You can do that.
We're not against that, but alot of self-employed
(03:19):
individuals, they might be inthe real estate industry.
They like real estate, theymight be into crypto investing
personally.
Did you know your solo K couldbuy crypto?
So we can help you do that.
So you just know as we'retalking about building wealth in
this solo 401k account, right?
And remember, this is aretirement account.
Long-term wealth building, youcan access at 59 and a half.
But as we're talking aboutbuilding wealth, we want you to
invest in the assets you knowand believe in they're going to
(03:41):
get a great return.
One thing I want to note about,too, when we're talking about a
solo 401k, you can do Rothaccounts, all right?
The solo 401k can be entirelyRoth dollars, the whole 70,000.
Old solo 401k and 401k rulesused to be the only contribution
into a solo 401k was theemployee contribution that could
(04:01):
be Roth.
And any of the company match orany of these other dollars that
go into the mix had to betraditional dollars.
That changed a couple years ago.
You could do 100% Roth now on asolo K.
So that 70K max could be allRoth dollars.
SPEAKER_00 (04:15):
Yeah, no, awesome.
And I it what's funny is a lotof the myths turn into the
benefits.
And I think a lot of peoplerealize, hold it, I thought that
wasn't true.
Yeah, that's one of the benefitsof the solo.
So I'll just point out one otherpotential myth that I hear a lot
of times is well, I'm too old.
Or once I'm, you know, I get ridof my business or whatever, I I
(04:41):
don't qualify or whatever.
And so we're gonna be talkingabout some of those um
misconceptions about whether ornot you can participate in one
as we develop this show today.
So uh as we talk about thesebenefits, and again, like I
said, sometimes you're you'reable to flip a myth into a
(05:01):
benefit, uh, and we start goingthrough this, and maybe we can
come up with a list of benefits.
I'm gonna start backtrackingthrough what I thought were some
of the myths.
And the one is that you areallowed to have a solo 401k with
any type of small businessrevenue.
So if you have a side hustle,maybe you're driving Uber.
(05:23):
You can find a solo 401k withyour Uber revenue.
You're selling something online,you're doing a small service,
you run a janitorial business inthe evenings with your family.
I don't know.
Any type of business incomeyou're generating, you are
allowed to have a solo 401k ontop of a work 401k and on top of
a Roth.
So I think that's a majorbenefit of the solo 401k, is
(05:47):
that you the the entry or thethe gateway to entry is very,
very low.
SPEAKER_01 (05:54):
Yeah, and I think this is the last client I was
just talking to about a solo Kyesterday who was a real estate
agent, right?
And she uses her solo K toinvest in real estate.
And this is the first retirementaccount she had had, she'd heard
of SEP IRAs, and everyone'slike, oh, you're a self-employed
person, you should do a SEP IRA.
And we set her up with a solo Ka while ago, and I just kind of
going back on how it was going.
(06:16):
And but this solo 401k is is forthose self-employed persons, and
that, like we said, we itdoesn't matter the type of
business it is, but there is oneimportant distinction here you
got to know.
This is not investment income.
So a lot of times we get realestate investors that say, well,
Matt, I go out, I got somerental properties.
Can my LLC that owns my rentals,can that adopt a solo 401k?
(06:38):
Because the business adopts a401k.
All right, and I want you tothink about, I'm trying to teach
two points here.
But think of like Microsoft,okay?
It has a 401k plan.
It's the Microsoft 401 plan, andthere's tens of thousands of
employees that have an accountin the Microsoft 401k plan.
Like, you know, we have a KQSLawyers 401k, directed IRAR
(07:00):
company has a 401k, right?
And each employee has an accountin the 401k.
When you have a solo K, there'sstill a business that adopts the
401k plan for the benefit of itsemployee, which may just be you
or your spouse if they'reworking in it, or maybe a
business partner too.
But but that's what it is.
There's still a plan adopted bythe company.
(07:20):
Now that company must be onethat provides goods or services.
It can't be one that has rentalincome or investment income.
Okay, that is not qualifying.
So that's the first thing isthis must be an operating
business.
Think of small business, bigbusiness, side business, I don't
care what it is, but it's umit's selling goods or services
typically, it's in the operatingincome.
As you guys know, our trifectathat we talked about.
(07:41):
This is left side on thetrifecta businesses.
SPEAKER_00 (07:44):
Okay, so as we kind of deal with these two pieces of
the equation of the benefits ofthe solo, and do I qualify uh
again, everything relates toeverything here, that the
barrier to entry is very low.
You just have to have businessincome.
So that's one of thequalifications is having
business income, and it's alsoone of the benefits is that I
(08:08):
can use that solo 401k againstside hustle income on top of a
Roth and on top of a day job401k.
Now, I one of the other benefitsI like about the solo 401k is
that you can borrow against it.
It's not like an IRA where Ihave to wait till I'm 59 and a
half.
Um, I I can start borrowingagainst my own 401k for an
(08:32):
opportunity or a problem, and Ican borrow up to 50% or$50,000,
whichever's less.
And what's nice about that isyou're paying interest back to
yourself tax-free.
So that interest payment, as youpay back that 401k loan, goes
all back into that 401k bucketthat continues to grow and
(08:52):
snowball.
So I love that borrowingprovision.
What's another benefit you like,Matt?
SPEAKER_01 (08:57):
Yeah, and I'd say that borrowing provision, we've
seen a lot of people use that.
Let's say they're starting up anew business and they're rolling
an old employer 401k, and sothey set up the solo K, they
receive those old 401k dollars,or maybe an old IRA that's been
laying around that they justroll over into the solo K, then
they do this loan to help withsome startup expenses in the
business.
It's not a distribution, it'snot taxable.
(09:18):
You got that five years to payback that loan.
We've seen people use thatparticipant loan in the solo K
to pay off high interest debt.
Um, it's a good strategy.
Um, so uh I love that one.
I don't even think about thatone.
So um glad to do that.
SPEAKER_00 (09:31):
And I think you really just highlighted one of
the other benefits is you canroll over into your solo 401k um
old IRA money or old 401k.
Why don't you explain that alittle bit more?
Because you started to touch onthat.
SPEAKER_01 (09:44):
Yeah, so in a solo 401k, you can put new
contributions in.
We talked about that 70,000, andwe'll hit that in part two on
how you calculate that andactually do that, the mechanics
of it.
But um but you can also rollover existing retirement account
dollars.
So if I got an old employer 401kwith traditional 401k dollars,
even Roth 401k dollars, I canroll that into my solo 401k.
(10:08):
Or let's say that you have atraditional IRA at you know, TD
Ameritrade, you can transferthat, roll that over into the
solo 401k in a traditionalaccount.
And so um, so we can getexisting retirement account
dollars into the solo 401k aswell.
SPEAKER_00 (10:25):
I love it.
I'm working a master list here,so everybody, you have to stay
tuned until the end of thispodcast because I'm gonna rattle
all these benefits off.
Um, the next one that I love isthat the 401k is asset
protected.
Now, if you're a bad enoughindividual or your the creditors
have a large enough claimagainst you, the solo 401k, like
(10:48):
an IRA, it's gonna be based onyour state of how much that 401k
is protected from a creditor,but it's pretty significant.
And so this is a major point inthat there's really only two
people that can get at your 401.
The IRS, if you don't pay yourtax bills, or if you're in a
divorce, you're gonna typicallyhave to split that 401 with your
ex-husband or ex-wife to keepthe an equitable divorce
(11:11):
happening.
Now, again, a lot can happen ina divorce as well.
But the point is, creditorscan't just dip into your 401k if
you owe someone a bad debt.
Car accident, a business dealgone bad, anything like that.
It takes a lot to break intothose 401ks.
We think of the OJ Simpsonstory.
I've written a lot about that.
Now, that was a planned 401k,kind of a group 401k, which is
(11:35):
going to have maybe a littlemore significant benefits, but
the solar 401k is no sloucheither.
They it really can be qualifiedas an asset protection vehicle.
SPEAKER_01 (11:45):
Yeah, and what Mark was talking about there with the
OJ Simpson, just on this assetprotection to illustrate the
point is, right, like not guiltycriminally, but got held liable
civilly and had like a$30million judgment against him.
Well, the Goldman family, whoreceived that judgment, could
never collect on it becauseeventually his income and that
he ended up living off of afterhe went broke was his NFL
(12:06):
pension and retirement account,which they could not take.
They couldn't seize.
Yet he was living off ofhundreds of thousands of dollars
coming out of this thing everyyear.
And so, but that's how yourretirement account is.
It's this asset that isvirtually impossible for a
creditor to attach and get.
So um, so we've seen a lot ofclients that have asset
protection risks.
We see physicians or contractorsor people that are like, we just
(12:29):
in our space, we just get suedevery once in a while, that are
like, that's a huge sellingpoint and value point, is just
that asset protection uhbenefit.
SPEAKER_00 (12:37):
Well, now moving along, one of the benefit
benefits we already highlighted,but I want to bring it to bear
with the second uh they're kindof go hand in hand, is Matt
already gave the big reveal, orI guess I did too, that you can
self-direct your 401k.
You can invest it in other smallbusinesses, real estate, do
lending out of it.
Oh, beautiful.
(12:58):
The concept of self-directing.
Please get over to our sisterpodcast, the directed IRA
podcast, where we talk about theself-directed ability and all of
the options and really not a lotof rules there either.
There's a lot of opportunity.
So that's one of our benefitshere on the list.
But the sister to that is youget to self-trustee your solo
(13:20):
401k.
Yeah.
And and and really control thecheckbook, if you will, for the
401.
So you can uh be in charge ofyour 401 without having to pay
big fees to a third-partyadministrator.
Would you agree?
How would you explain that,Matt?
SPEAKER_01 (13:34):
Yeah, so when you put money in that solo 401k,
right?
Let's say you put a you rollover some funds or there's a
transfer or you put your newcontributions in, right?
You're gonna want to go andinvest those.
Now we've talked about realestate.
Like someone might buy a singlefamily rental, right?
They may go do private moneylending out of it, where they're
lending money out at 12%interest in two points.
(13:55):
Well, if you think aboutself-directing, and if you're
new to this, your custodianneeds to handle that.
And that's what we do at ourcompany directed diary.
Well, we'll do custody of theseactual accounts.
But if you're like, can we justput that money in a checking
account and I'll just write thechecks out for the investments
I'm making and I'll hold it inthe name of the 401k, but I'll
have this checkbook control togo make the investments and
(14:15):
receive the income, pay anyexpenses on it.
Real estate would be a commonone.
That's what that self-trusteeand that checkbook control is.
So in our solo K docs, you canbe trustee of the Solo 401k.
And our 401k documents, by theway, are pre-approved by the
IRS.
They're fully open to any assetallowed by law, whether that's
crypto or real estate orprecious metals or small
(14:36):
business notes, whatever you'redoing, you can do those with our
solo 401k plan documents.
As the trustee, which means youcan sign on the stuff and even
have a checkbook to go do this.
Now, our lawyers at KKOS Lawyerswill do a consult when you set
this up.
We're going to explain how thisworks.
Make sure it works in yoursituation.
Go over the things you might bethinking about investing in and
(14:57):
how that might work and answeryour questions.
So just know this is not like ahit the easy button and you just
get some document.
We are here to help you get itset up, make sure it's
structured properly for yourbusiness and your situation, and
answer the inevitable questionsthat come as you're new to this,
and you get a real tax lawyerhelping you along in the way.
SPEAKER_00 (15:14):
Oh, I love it.
I mean, the list continues togrow every time you start
speaking, Matt.
Next benefit that I'd like isthat when you pay to set up your
solo 401k, it's a tax deduction.
It is a tax write-off to meetwith your lawyer, get this done,
and KCOS Lawyers is going towalk you through all the
provisions of what you shouldlook out for or not and tailor
(15:37):
it to your situation.
And we have a special every yearin the month of October to help
you get this done because it'sgot to be a year-in strategy.
So, I mean, dude, yeah, wealmost forgot the tax write-off,
right?
SPEAKER_01 (15:50):
I know.
How could we forget?
I mean, we always love a goodtax write-off.
Who doesn't?
Plus, there's also a tax creditavailable too, so we'll have
more detail on that.
Um, and that if you do some, youhave to do a couple extra step
there to get that credit, buteven works on the solo 401ks.
So a lot of incentives to getthat set up and start saving for
retirement.
Um, let alone, you know, becausewe talk about year-end tax
(16:14):
planning.
If you're trying to get taxwrite-offs today and do
traditional dollars, like that'sa big ticket item that saves you
taxes today.
If you're looking at theseyear-end and being like, I'm I
had a great year this year, Ineed some tax deductions.
Well, we're talking about thecontributions going in as being
a tax deduction too, if you dotraditional dollars.
SPEAKER_00 (16:33):
Well, and I want to bring that up too, as probably
uh the next benefit that we'regonna uh really dive deep into
in part two of this series isthe contribution amounts.
There's a lot of flexibilitythere.
You might put in Roth money, youmight put in traditional money,
you might have your companymatch, you might do an after-tax
(16:54):
contribution to even get more inthere.
Um you might set up a 401kcontribution amount for your
spouse.
Your kids can even be in thesolo 401k.
It includes your spouse andchildren.
So all of these contributionamounts amount to flexibility.
It kind of gives you a lot ofplanning opportunity, which I
(17:15):
put down here is uh one of ourkey benefits are these high
contribution amounts and theflexibility in the contribution
amount.
SPEAKER_01 (17:23):
All right, now another benefit to this, and
again, we're thinking long-termwealth building and also legacy
building here, is thisretirement account when you pass
away, this solo 401k, can betransitioned over to your
surviving spouse if you haveone, or over to your kids as an
inherited IRA and continue tobeing invested for up to 10
years in a tax-advantagedmanner.
(17:45):
What this was Roth dollars,you're gonna get another 10
years of tax-free growth.
And so retirement accountsbecome one of the best assets to
inherit, because whatever assetsyou get in there, you can
continue to keep growing them,and then you can pull them out
whenever you want in that10-year window, but you just
have to pull it out within 10.
So, particularly if this is aRoth solo 401k, very powerful
(18:06):
strategy and something toinherit, a great way to pass
down wealth and help build alegacy for your family.
All right, now one other lastbenefit here, because I know we
talked about qualifying for asolo 401k.
You got to be self-employed witha business, selling goods or
services type thing, you know,ordinary income.
And you can't have any otheremployees, right?
That's the solo 401k where youfit.
(18:26):
We talked about that real estateinvestor, and this is a client
we get a lot.
We have a lot of real estateinvestor clients that might have
rental properties, for example,and they've got an LLC, and it's
got maybe, or they've got 10LLCs and 10 different
properties, for example.
And they might be like, Well,how I want to do a solo K.
I've got great cash flow, greatincome.
I want to be building thistax-free bucket, maybe doing a
Raw solo K, whatever yourmotivation is.
(18:47):
How do I do that?
How do I do that?
Well, that's the side door solo401k.
So what we will do there is weset up a management company.
This could be Schedule C soleproprietorship.
Um, you know, you could do an Scorporation, probably not,
probably just doing a Schedule Csole proprietorship.
This could be an LLC, maybe not.
I probably just do an LLC ifyou're in this scenario here.
(19:10):
You're gonna pay a managementfee from the rental real estate
entities that you're taking anexpense for over there, and
you're gonna pick it up in themanagement entity.
Now, generally, you never pushrental income over to management
fee income and ordinary incomebecause you're picking up
self-employment tax, right?
But if we're gonna use it tofund a retirement account to
(19:30):
build a bucket of tax advantagedollars, whether those are Roth
or traditional, we want to dothat and think about that.
So that's the side door solo Kwhere you can qualify is by
doing a management entity.
You need enough assets over hereto management on your right side
of the trifecta here.
And I'm for those of youlistening on the podcast, the
hand gestures I know are totallyworthless, but you can imagine,
(19:51):
right?
We got the rentals and thatexpense you're picking up over
there, but you pick it up asincome over here in your
management entity, and we'reusing that to adopt the solo K
and then make the contributionsthere.
SPEAKER_00 (20:03):
All right.
Well, gosh, I love that one too.
All right, I'm gonna do my besthere to summarize these top 10
benefits of the solo 401k.
Number one, I can have a day joband even a Roth IRA and a solo
401k.
The solo 401k can be stacked ontop of these other retirement
accounts for maximum benefit andgrowth.
(20:25):
Number two, I can borrow againstthe solo 401k up to 50% or
$50,000 and pay interest back tomy own account.
Three, I can have complete assetprotection for almost any
possible lawsuit with this solo401k, far better than an LLC or
some sort of irrevocable trust.
The solo 401k are time tested.
(20:47):
Number four, I can roll overmoney from an old IRA or an old
401k to fund the solo on top ofnew contributions.
I get to choose.
Number five, I can self-directmy solo 401k and creative
investments and all the types ofuh self-directed assets that we
(21:08):
talk about on our sisterpodcast.
And number six, I can evenself-trustee the 401 with its
own checkbook.
I can create LLCs with my 401kto self-direct and have more
control.
Number seven, I have flexiblecontribution amounts that um can
be create tax deductions or beRoth structured and create
(21:31):
massive write-offs with year-endplanning if I feel so inclined.
And number eight, I can put itas part of my estate plan.
The 401k can roll out into theform of an IRA for my spouse or
children upon my passing.
Number nine, I get a taxdeduction for any consultations
or setup fees with my lawyer andmaybe even a possible tax
(21:54):
credit.
Not to mention, we have aspecial this month in October.
Make sure you look down in thedescription below for that
special.
And then number 10, I can evenmanufacture a solo 401k out of
passive income with my realestate portfolio.
These solo 401ks are freakingabsolutely amazing.
SPEAKER_01 (22:15):
Wow, the top 10.
I there's probably more benefitsto get into, and everybody's
situation is unique and howyou're gonna use it and how
these benefits are gonna affectyou.
Um, so make sure you get over tokquslawyers.com, take advantage
of the special, get it set up.
Don't wait till year end.
If you want to make 2025contributions and you want to be
able to maximize though those,you need the solo 401k set up in
(22:37):
2025.
All right.
So let's get some time, let'sgive you some time so you're not
rushing at year end.
Let you enjoy the holidays,okay?
We want you to enjoy theholidays and not be doing this
last-minute planning.
Get in early to get someconsultation on this if this is
something that could work foryou.
Um, and our attorneys would behappy to help you walk you
through this.
It's included in the fee to getthis set up.
So um, and if you love thispodcast, I'll just say that too.
(22:59):
Please like it, share it withyour friends and family,
subscribe to the podcast ifyou're not already.
We've got so many episodes hereto help you save on taxes,
protect your assets, and buildwealth.
Um we'll be back next time foranother incredible episode of
the Major Business Podcast.
We'll see you then.
See you then.
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