A retirement savings vehicle designed for the smallest businesses.
A solo 401(k) lets a self-employed individual set up a 401(k) plan combined with a profit-sharing plan. You can create one of these if you work for yourself or if you own a small business with just 1–2 full-time employees (FTE) including yourself (the second FTE must be your spouse).1
The ever-increasing cost of college is no secret. In-state tuition at public four-year colleges currently averages $8,655 per year, while yearly tuition at a private four-year school costs an average of $29,056.1 With tuition increases historically hovering around 6% to 7% per year, the price tag is only going to rise.2 If you're a new parent, the total bill for your child's college education could be close to $300,000.
If you would like to pass wealth from one generation to the next while incurring a minimal amount of tax, you may have set up an irrevocable trust, or you may be considering doing so. However, irrevocable trusts are, by their nature, restrictive. The ultimate beneficiaries of your irrevocable trust will face restrictions on how much and when assets can be pulled from the trust. In addition, if you or the beneficiaries later need to change the irrevocable trust's trustee, it can be very difficult to do so.
When an IRA is transferred to a beneficiary, the recipient must decide how they want to disburse the IRA to themselves. It is important to remember that any distribution from an IRA results in ordinary income to the recipient. They have three choices.