Going solo: Not a 'free ride'
Despite the obvious benefits, there are a couple of drawbacks to solo 401(k) plans.
If your business has any other employess, they may have to be covered under the plan.
You have to deal with the hassle and cost of running the plan. Good news: After the tax rules were changed to favor solo 401(k) plans, more "big players" entered the arena. Now that financial outfits like Fidelity and Smith Barney offer solo 401(k)s, administrative costs have plummeted. Typically, a small business owner might be charged a one time setup fee of $100 and a small annual administrative fee ranging from $50 to $250.
As always, feel free to pass this Tip along to friends, and reach out if you need help with your personal tax and finance situation.
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