Are you the owner of your business? Thinking of starting a new one? Well, there is no right time for business and any time is a good time to start making your own career decisions. Starting a business is not just about starting your own store or online store, but also about carefully planning the next few months and even years of your life. The first thing to consider is your retirement and building a nest egg for your vacant years. For most entrepreneurs, starting a retirement fund before planning the business may sound outrageous. However, it helps to start considering your options side by side.

Why are Solo 401k plans popular with small business owners?

There are many small business 401k plans to choose from and only 401k is the perfect plan for self-employed professionals. Only 401k is a retirement solution for the self-employed and allows them to make substantial contributions versus traditional IRA plans. Anyone who owns a business (with no employees or with employees who may be excluded from such benefits) may participate in these plans. All you need is some self-employment activity along with insignificant full-time employees.

The IRS considers any business that is run for profit to be eligible for an individual 401k account and even includes those who are self-employed part-time. Professionals who work for an employer along with part-time self-employment are eligible for 401k and employer-only 401k savings plans. For small business 401k plans, employers can also include their spouse in the plan.

One must understand that not all individual 401k plans are created equal and it is important to find one that offers checkbook control along with the ability to make non-traditional investments. Some of these non-traditional investment opportunities include real estate, currencies, private companies, commodities, precious metals, and options.

The most attractive property of small business 401k plans is the higher contribution limits. One can contribute up to $53,000 into individual 401k retirement plans, and the limit is even higher for people age 50 and older. Professionals age 50 and older can contribute up to $59,000 into these retirement accounts.

However, all good things come at a cost and in solo 401k plans; you must wait until you are 59½ to withdraw money from these funds. If you withdraw early, the IRS imposes a 10% penalty on such withdrawals.