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NerdWallet: Should you open a solo 401(k)?

This article is reprinted by permission from NerdWallet.

The perks of self-employment are plenty, but there’s at least one significant drawback: the lack of an employer-sponsored retirement plan like a 401(k).

Enter the solo 401(k), or what the IRS calls a one-participant 401(k). Designed for self-employed workers, this account mimics many of the features of an employer-sponsored plan, without the drag of working for the man.

What is a solo 401(k)?

Pretty much exactly what it sounds like: an individual 401(k) designed for a business owner with no employees. In fact, IRS rules say you can’t contribute to a solo 401(k) if you have employees, though you can use the plan to cover both you and your spouse.

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