I recently did a guest video blog for www.bawldguy.com. The subject related to the benefits of a solo 401(k) plan vs. any IRA. Are IRAs bad…of course not. But, especially for an self-employed individual, I just don’t see the benefits of any IRA over a 401(k).
One should understand that the potential penalties associated with a Prohibited Transaction within an IRA is a death sentence for the IRA and its account owner. Full distribution, penalties….yikes.
It doesn’t mean that there are not potential significant penalties associated with a Prohibited Transaction within a 401(k), but the penalties are not nearly as drastic within the 401(k). And, since the 401(k) is an employer sponsored plan, in many cases relief can be sought.
Watch the video and give consideration to the 401(k). You just may find that if you qualify for the 401(k), you will never look at establishing a self-directed IRA.
As always, the information provided is not intended to be, nor should it be interpreted as, any form of tax, legal, financial or investment advice. You must always consult with your respective professional in all such matters.