Help Center1. What is a Solo 401(k) plan, and how does it work for travel nurses?
A Solo 401(k) plan is a retirement savings plan designed for self-employed individuals and small business owners with no employees, except for a spouse. For travel nurses, this plan allows you to contribute both as an employee and an employer, maximizing your retirement savings. You can make salary deferral contributions up to $22,500 (or $30,000 if you're over 50) and additional employer contributions, allowing for a total contribution limit of up to $66,000 (or $73,500 if over 50) in 2023.
2. What are the key features of a Solo 401(k) plan?
Key features of a Solo 401(k) include:
- High Contribution Limits: As mentioned, you can contribute both as an employee and employer.
- Tax Advantages: Contributions can be made on a pre-tax basis (traditional) or after-tax basis (Roth).
- Loan Options: You may borrow up to 50% of your account balance, up to $50,000, for personal use.
- Investment Flexibility: You can invest in a variety of assets, including stocks, bonds, and real estate.
3. How can travel nurses use a Solo 401(k) to save for retirement?
Travel nurses can use a Solo 401(k) to save for retirement by setting up the plan as soon as they start their self-employment or freelance work. They can contribute from their earnings while working at various assignments, allowing them to build a substantial retirement fund. Additionally, they can choose between traditional and Roth contributions based on their tax situation.
4. Are there any fees associated with a Solo 401(k) plan?
Yes, there may be fees associated with setting up and maintaining a Solo 401(k) plan.
These can include:
- Setup Fees: One-time fees for establishing the plan.
- Annual Maintenance Fees: Ongoing fees for account management.
- Transaction Fees: Charges for buying or selling investments.
It’s essential to review the fee structure of your chosen provider to understand the total costs involved.
5. What happens if I leave my travel nursing job or stop working as a freelancer?
If you leave your travel nursing job or stop working as a freelancer, you can keep your Solo 401(k) account open as long as you have a balance. However, if you cease all self-employment activities, you may need to either roll over the funds into another retirement account or close the plan. It’s advisable to consult with a financial advisor about the best course of action based on your situation.
6. What are the tax implications of contributing to a Solo 401(k)?
Contributions to a Solo 401(k) can have significant tax implications:
- Traditional Contributions: Made pre-tax, reducing your taxable income for the year.
- Roth Contributions: Made after-tax, allowing for tax-free withdrawals in retirement.
Withdrawals in retirement are taxed based on the type of contribution. Early withdrawals (before age 59½) may incur penalties unless specific conditions are met.
7. How do I manage my Solo 401(k) investments while traveling?
Managing your Solo 401(k) investments while traveling is made easier with online access to your account. Most providers offer mobile-friendly platforms where you can monitor your investments, make changes, and even execute trades from anywhere. Ensure you choose a provider with robust online tools and customer support to assist you while on the go.
8. What support is available if I have questions about my Solo 401(k)?
Most Solo 401(k) providers offer customer support through various channels, including phone, email, and live chat. Additionally, many have extensive online resources, including FAQs, articles, and tutorials to help you understand your plan and make informed decisions. Don’t hesitate to reach out to your provider for any specific questions or concerns.
9. Can I roll over funds from another retirement account into my Solo 401(k)?
Yes, you can roll over funds from other retirement accounts, such as a traditional IRA or a previous employer's 401(k), into your Solo 401(k). This can be a great way to consolidate your retirement savings and take advantage of the higher contribution limits. Be sure to follow the proper rollover procedures to avoid tax penalties.
10. How do I set up a Solo 401(k) plan as a travel nurse?
To set up a Solo 401(k) plan, follow these steps:
1. Choose a provider that offers Solo 401(k) plans tailored to self-employed individuals.
2. Complete the necessary paperwork to establish the plan.
3. Obtain an Employer Identification Number (EIN) from the IRS, if required.
4. Fund your account by making contributions based on your earnings.
5. Start managing your investments according to your retirement goals.
By understanding these aspects of a Solo 401(k), travel nurses can effectively plan for their financial future while enjoying the flexibility of their profession.
To set up your free 1-on-1 investment consultation with one of our fiduciary advisors, please call (480) 364-7401; Email: hello@cognisgrp.com; or schedule a free zoom meeting HERE