When it comes to building wealth and reducing taxes, Solo 401k decisions are some of the most important choices you’ll ever make. Yet many self-employed professionals and realtors never stop to ask if they’re making the right ones. A Solo 401(k) isn’t just a retirement plan — it’s a powerful financial tool that puts you in control. The problem? Control means responsibility, and your Solo 401k decisions can either accelerate your growth or create costly mistakes.
Why Solo 401k Decisions Matter
Most people think of retirement as “set it and forget it,” but with a Solo 401(k), every choice matters. From deciding how much to contribute as “employee” versus “employer,” to choosing between Roth or Traditional tax treatment, your Solo 401k decisions shape both your immediate tax savings and your long-term wealth.
The Hidden Power of Borrowing
One of the most overlooked Solo 401k decisions is whether to borrow against your plan. Unlike a traditional IRA, the Solo 401(k) allows loans — sometimes up to $50,000 per participant. That means you could fund a real estate purchase, cover business expenses, or jump on an investment opportunity using your own retirement dollars. But these decisions come with rules, and if you get them wrong, penalties and taxes can follow.
The Bottom Line
The biggest mistake is assuming your Solo 401(k) runs itself. The truth is, your Solo 401k decisions are what make the plan either an average savings account or a game-changing financial engine. Are you making the right ones — or leaving money on the table?
Curious which Solo 401k decisions are best for you? Contact James D. Miller, CPA at jdmcpa4u.com for expert tax planning and preparation.