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ZOMGGGG… Getting $11,000 Back in Taxes!!

by J. Money on Tuesday, April 1, 2014

briefcase full of cash

$11,706 to be exact. And no, this is not an April Fool’s joke ;)

(I was going to pretend I sold this blog for a million dollars and was dipping out, but came to my senses figuring you guys were way too smart for that… It’s pretty obvious my blog is worth at least a billion.)

So today, I feel rich my friends! Despite my monthly emails back and forth w/ my accountant trying to assess the damage of Financial Apocalypse over the summer, we still managed to overpay and are now being handsomely rewarded for it. Which only reinforces my love for “loaning the gov’t money” vs calculating everything appropriately even more. If my accountant can’t even predict it perfectly, how the heck can I expect myself to? (And believe me, when there’s a *surprise* in the tax department you want it to be on YOUR side, not the opposite.)

So yet again I happily hand over my $400 for my accountant’s services which I’m sure played a nice role in figuring this stuff out… along w/ the following variables I reckon changed the game:

  • We lost tons of money on our rental house ($20k fixing it up, mgmt fees, etc)
  • We paid tons of money to childcare (I had no idea you save money w/ taxes here??)
  • We/I earned significantly less than expected in 2013
  • Other things I forgot to mention to my accountant?

Whatever the case, we now have over $11,000 more to play with than planned. A good problem to have :) Some of it will be automatically applied to these 1st quarterly payments coming up this month, but the rest is to do with as we please. Which will be to max out both my SEP IRA, as well as my ROTH.

The former because if we don’t I’ll end up getting a few thousand dollars LESS back (the power of retirement accounts!), and the latter because I don’t want to break my record of 6 years or so in a row maxing out the Roth :) That’s over $30,000 put in which has grown to a TON more over time already! Currently hovering around the $50,000 mark WITHOUT this new $5,500 infusion. Talk about the power of compound earning.

But even more shocking than all this extra new money we’re now getting is what our 2014 payments are estimated to look like. A DRASTIC difference from previous years. If you’ll recall, this is what we were paying throughout the years:

And now?

  • 2014: $2,800/quarter

Wow. That’s more than HALF less! Holy cannolis, Batman! And since I’ve hoarded a lot of cash in my “taxes” business savings account anyways, it pretty much means I’ve already got this entire next year covered. So in a way, I can feel like I don’t have to pay taxes at all this year – woo!

Of course, on the flip side, this means that yes – we’re making a $hit ton less than normal. Over a half less, for that matter – similar to these future taxes we’ll pay. Part of that is our doing on purpose (nixing the wife’s income to focus on her final PHD dissertation, selling off $50k of my online projects), but another factor is that my online businesses are making a lot less than normal too. Which is why we named it our Financial Apocalypse!

Still, I can’t help feeling on top of the world today. Or, all year for that matter. It’s funny. You’d think losing half your income would mean you lose a ton of happiness in the process, but that simply isn’t the case. Yeah I have my days where I want to punch everything in the face – especially my income streams – but overall I’ve only sensed a small amount of discomfort. I could be in denial, but for now I’m running with it :)

So a happy April Fool’s day indeed for us. Only the trick was in our favor for once. And for the first time in at least 8 years, we get to experience this long forgotten joy of passing Go and collecting $200. Multiplied by a whopping 55, haha… I’ll take it!

And while we’re on this joyous topic of taxes, how did you guys fair this year? Did you get a nice surprise too, or did you have to pony up something? Do you do your own taxes, or pay someone else to? On a scale from 1-10, how sexy is J. Money? (Have to make sure you’re paying attention ;))

I think I’m gonna go now and play with all my new handfuls electronic money… If only the gov’t sent briefcases of cash!

——–
PS: A lot of you have asked why I participate in an SEP IRA vs Solo 401(k). I didn’t quite know myself so I asked my accountant why we do that and she told me for two reasons:

  1. I always wait until the following year to invest which is not possible in a Solo 401(k) (you have to invest the money in that *same* year – you don’t have until April 15th like with others).
  2. You have to spend a lot of time and money to get it set up correctly, and you need a specialist to do it – aka not my accountant or me. And it doesn’t guarantee I’d make more in the long run anyways.

So I think for now we’re set up appropriately :)

UPDATE: Apparently I need to research this Solo 401(k) stuff more :) Thanks to everyone who piped in down below in the comments!

[Bad ass briefcase full of cash photo by Ryan Shea]


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{ 76 comments… read them below or add one }

1 Mr Financial Debauchery April 1, 2014 at 5:53 am

Badass! Nice work staying organized with the accountant and getting all that money back.

But did the IRS really send it back to you in a used brown briefcase from the 1970′s? :)

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2 J. Money April 1, 2014 at 7:52 am

In my dreams they will :)

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3 moneystepper April 1, 2014 at 6:27 am

Wow – that is one tasty refund!!

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4 Michelle April 1, 2014 at 6:38 am

$11,000 back is awesome even though there are, of course, reasons for why that happened. This tax season was my first “real” year of being self-employed, and paying so much in taxes makes me want to cry!

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5 J. Money April 1, 2014 at 7:54 am

Ah yes, I remember those days fondly :) Quarterly taxes is no fun at all.

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6 S L April 1, 2014 at 7:59 am

Wow, I know you are happy to see that money but all I can think of is “OUCH! The government got a heck of a nice zero interest loan from you.” My goal each year is to be a zero, or so close to zero preferably paying nothing. Last year, I paid. This year, readjustment readjustment, I got money back, more than I wanted (obviously, since I got money back *sniffle*) The good news is it will top out my emergency savings and I can go back to figuring out how to invest some of this, but if I had figured things out better, it would have been there during the year. I know, sounds like first world problems *grin* I am happy to have gotten the money, I just wish I had been better figuring my taxes.

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7 J. Money April 1, 2014 at 8:06 am

Well, a bulk of this money I’m getting back I “loaned the gov’t” last quarter since I pay quarterly taxes :) So they only had it for a few months… (I maybe lost $2.00 of interest? haha…).

I agree if you can zero out it works out well, but ONLY if you use that extra money to save/pay off debt/etc throughout the year. Most people would just end up increasing their lifestyle with it and would be better off getting a bigger chunk to make them stop for a second and use more appropriately towards their goals.

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8 S L April 1, 2014 at 8:09 am

Heh. that is true — I have had too many lean years for that to bite me too much but it is something for people to watch.

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9 Mike Collins April 1, 2014 at 8:04 am

Wow, that’s a heck of refund! I got back more than I expected too this year and I already adjusted my tax withholding to have a little less come out of future paychecks. Of course, if my online income takes off I’ll have to boost it up again but that would be a good problem to have.

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10 J. Money April 1, 2014 at 8:06 am

Here’s to that “problem” happening to the both of us! :)

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11 Anne @ Unique Gifter April 1, 2014 at 8:13 am

Let’s go with a 9.

That’s awesome that the $ is coming your way, that’s quite a chunk of coin! We have an accountant do our taxes. This year my refund is just over $2K, which is surprisingly large! My RRSPs and donations keep cancelling out any extra curricular income taxes I might pay.

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12 J. Money April 1, 2014 at 11:03 am

That’s how to work it right there w/ the cancelling out! Way to go :)

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13 Holly@ClubThrifty April 1, 2014 at 8:23 am

I also have a SEP IRA for the reasons you’ve mentioned. I maxed it out last year and it was nice to wait and see the exact dollar figure I could contribute and top it off after we did our taxes. 2013 was also my first year of self-employment and I paid way too much in taxes. I am going to try to pay in a little less this year!

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14 J. Money April 1, 2014 at 11:04 am

Mo’ Money Mo’ taxes! :)

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15 Shannon @ Financially Blonde April 1, 2014 at 8:33 am

We had a massive tax bill last year because of my income from my previous job and other factors, and I vowed that things would be different this year. I started my company is September and made it a goal to have as many expenses paid for in this first three months before I ramped up my income because I knew the losses would help and I can carry them forward. And when all is said and done, we came out about even on state and federal taxes and I feel good about that. Who knows what next year will bring.

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16 J. Money April 1, 2014 at 11:04 am

Love it! And very smart too – especially if those expenses were necessary and not just used to offset the tax stuff ;)

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17 a terrible husband... April 1, 2014 at 9:09 am

Sweet! I got some ideas for that $11,000… that don’t involve coins or stamps. Sorry!

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18 J. Money April 1, 2014 at 11:05 am

(tell it to someone else then ;))

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19 Liz April 1, 2014 at 9:17 am

We had a net refund of about $400. Overpaid federal underpaid state. As a tax accountant, I was pretty satisfied that we managed our withholding fairly well : )

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20 Stefanie @ The Broke and Beautiful Life April 1, 2014 at 9:47 am

I just got my 2012 return. My dad is a tax guy so he does mine but only after deferring for as long as possible. Just deposited a return check of $8 from the great state of NY.

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21 J. Money April 1, 2014 at 11:06 am

Oh man, that deferring stuff hurts my brain just thinking about… kinda like waiting til the last minute to pay a bill, *shiver*. I get that it’s best to hold on to your money as long as possible and (hopefully) have it earning more for you in meantime, but to stressful for me. Y’all have bigger balls than I :)

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22 Dee @ Color Me Frugal April 1, 2014 at 9:57 am

I think we are getting a few thousand back too. I’m not exactly sure why at this point, but we will be looking into what we can do to avoid loaning the government so much money next year!

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23 Rebecca @ Stapler Confessions April 1, 2014 at 10:25 am

Fabulous! And I’m completely jealous. This year, we owe over $8k, including a $124 penalty for not paying estimated taxes throughout the year. I would like to pay estimated taxes this year, but the first payment — $2100 — is due April 15th and the timing for that just sucks!

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24 J. Money April 1, 2014 at 11:08 am

Ahhhh, yup – the April 15th one is SO close to the cut off (or really it’s the SAME DAY??? haha…), and tough when waiting to the last minute to pony up… On the plus side, that usually means you’re making some nice side money so this time around ya gotta remember to siphon some away for the tax man :) not fun, but more fun than paying penalties and stressing.

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25 maria@moneyprinciple April 1, 2014 at 10:32 am

Very pleased for you my friend. We here in the UK are still in the process of submission (our accounts are with the accountant) but…I think we’ll have to pay tax. Holding some cash specially to avoid nasty surprises.

I have the feeling your on-line business is going to pick up big time; keep on at it…

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26 J. Money April 1, 2014 at 11:09 am

Thanks Maria! I hope so too :) (And that you don’t have any nasty surprises as well!)

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27 Catina Mount April 1, 2014 at 10:33 am

You WERE a 9 but that $11k shoots you to a10! ;-)
I received a refund (AMEN!), but nothing close to that. It stinks that your online income is down by half…what causes it to drop so drastically?

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28 J. Money April 1, 2014 at 11:11 am

YES! 10! I’ll take it! :)

Lots of variables w/ my online income including selling some of my properties (on purpose), google changing up stuff (not my doing), and just overall treating my projects more has hobbies than businesses cuz business is no fun :) I’m like the worst businessman actually, in that regard, haha…

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29 Catina Mount April 1, 2014 at 11:26 am

I heard that….hanging out in these circles makes me cry over my 8-5 grind….business is boring.

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30 Brian@ Debt Discipline April 1, 2014 at 10:37 am

Nice job J! Those type of refunds are a thing of the past for us.With both my wife and I working, changing our deductions years ago, interest payments dipping (good thing), and child credit non-existent these day we are getting back about $1k.

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31 J. Money April 1, 2014 at 11:12 am

$hit, $1,000 is more than $0.00! This is the first return we’ve gotten in years. And totally unexpected (the best kind :)).

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32 Financial Samurai April 1, 2014 at 10:48 am

Big bucks back! Even better is the estimated taxes cut in half for the year!

Any idea what happens if you DOUBLE your income in 2014 with a halving of estimated taxes? Do you just make a call to make more in 2Q, 3Q, etc if you see more income? Cause my accountant said there was a penalty and to just follow the safe harbor rule of always paying the gov’t 10% more and more and more every year lol.

Just got my state refund back. Time to bet it on Black!

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33 J. Money April 1, 2014 at 11:14 am

Oh yeah, if more $$ starts rolling in I’m instructed to tell my accountant so we can adjust accordingly :) Which is totally fine if you’re responsible enough to put aside that “tax money” anyways. And in times when the opposite occurs, like with us last year LOSING money, it’s even more nice because you adjust what you’re sending in a lot lower. Or in our case, you skip an entire quarterly payment because you’ve paid too much earlier in the year! So def. a smart thing to do. Better to avoid surprises than get them, unless they turn out in your favor ;)

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34 Andrew@LivingRichCheaply April 1, 2014 at 10:50 am

It’s definitely a nice feeling when you get a big refund. I’m lucky that my taxes are pretty simple…W-2s and no property. We just had a baby in 2013 and I thought we would be getting more back, but my wife’s former employer (a small preschool) withheld nothing from her check so it all comes due now. At least I don’t owe.

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35 J. Money April 1, 2014 at 11:15 am

Oh wow. Don’t forget to adjust those withholdings for the future! Unless you think you’re gonna break even again (and that’s what you want).

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36 Richard April 1, 2014 at 10:57 am

We also got our largest tax refund this year at $4,500 (which is no where close to $11k – NICE!). Normally, we are much closer to $1k, but we had some things occur this year that won’t in the future – education expenses – and I was conservative about how the child deduction & daycare expenses would impact my taxes.

I am with you that I would much rather get a refund than have to pay. Plus, my budget is in line and we are already savings/giving/having fun – so I don’t mind giving the government an “interest free loan”. Less hassle is less stress.

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37 J. Money April 1, 2014 at 11:20 am

“Less hassle is less stress” – amen, brotha!

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38 Crystal April 1, 2014 at 11:11 am

Yay! Woot! Whoo-hoo!!!

We just got our last stock document in the mail, so we’ll be doing our taxes this coming Sunday. I’m betting we get a $3000 return. Mr. BFS thinks we’ll be lucky to not owe anything. But we also made significantly less in 2013 than we did in 2012, so I think we were overpaying our estimated quarterly payments. We’ll see. I know we won’t be getting $11k back since we only paid in $32,400, but I’d be super happy with 10-15% back. :-D

Oh, the joys of self-employment. I’m also a little whiny about the 30-33% we pay overall after deductions and whatnot…

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39 J. Money April 1, 2014 at 11:22 am

Do you guys use an accountant? If so I always call them when money stuff changes (up or down) to adjust quarterly taxes as life changes. That way we’re paying less when making less (so it doesn’t suck!!) and then we’re paying more when we’re making more so we do don’t get in trouble :) I find my sanity stays in place much better that way too, haha…

I don’t know how you change it though if you do the taxes yourself – that stuff’s too scary for me to mess around with.

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40 Deacon April 1, 2014 at 12:27 pm

I definitely think that your site is worth billions, so don’t settle for less. This is the first year where I owed the Federal Government due to underpayment. It wasn’t much, but definitely made me re-think how much to set aside for quarterly payments. I hate loaning the government money at 0% interest for a year, but I also hate owing anybody money. It’s a catch 22 my friend.

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41 J. Money April 2, 2014 at 4:27 pm

At least that means business is good, eh? :)

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42 Katie April 1, 2014 at 1:06 pm

You need to look into the individual 401k more, the plan must be set up by the end of the plan year but the contributions can be made up to the tax filing deadline. So for 2014 the plan has to be started by 12/31/14 but contributions can be made until 4/15/15. Also you can contribute a lot more to an individual 401k than a SEP.

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43 J. Money April 2, 2014 at 4:30 pm

Oh, well that’s a little better! Not sure how much it costs to set it up, but you’re right – I need to look into it more to really compare. It’s probably good I can’t put in more $$ cuz I currently don’t have the cash flow like I used to! :)

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44 AndrewsDad April 1, 2014 at 1:37 pm

I am of the believe that getting a bunch of tax money back is a bad thing. I have this conversation with the wife every year at this time. We are getting back about $920 instead of the normal 5 – 8 K and I am really good with it. Because… it means we had more income and that is a good thing, correct? While I think its important to do what you can to minimize tax, the fact is if you pay a lot of tax, its probably because you made a lot of money. The key is to position your self so you have legit write offs. For example, with my job, I can write off gas and car expenses. That saves hundreds of dollars a month. Putting money into retirement accounts is another excellent way to reduce the tax burden.

I think what most people miss about “giving the government an interest free loan” is the opportunity cost you are missing out on. If you could have invested that same 11K and got a 10% return, $1,100. Now of course you could have also lost money on the same investment but over the long haul, 20, 30, 40 years, with a reasonable investment strategy, taking that money and investing it instead of letting the government hold on to it and send it back later, is going to cost you many thousands that you could use to buy old coins or stamps.

Not sure if this has been mentioned or not but it is my understanding, as someone who is not qualified to give tax advice, that if you withhold enough in the current year, to have paid the amount of tax you owed in the prior year, you will not get hit with a penalty if you under withhold. So if my 2012 tax bill was 8K then I can send in 2K per quarter, 8K total for the year, for my estimated tax and even if I end up owing 20K because my new coin blog rocked, there is no penalty. Its just my understanding of the law.

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45 J. Money April 2, 2014 at 4:32 pm

I agree with you 100% on the opportunity cost – but ONLY if you indeed jump on that opportunity and don’t end up wasting the $$ on lifestyle inflation. Which is what most people end up doing, and why I’m always on the “getting a refund is good” side of the camp :) If people truly did save/invest it throughout the year it’s def. the smarter route to go.

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46 Done by Forty April 1, 2014 at 2:43 pm

That’s a great windfall, J Mo. We got a surprise that was less than a tenth of that amount, but it still felt pretty good…until I saw the return you got.

It’s great to hear that you’re dealing well with income changes. I imagine yours might fluctuate quite a lot, so maybe the big gains are coming…

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47 J. Money April 2, 2014 at 4:33 pm

I hope so! I usually do play well with the Even Steven concept, so now that money’s been low recently, it’s time for an increase to “break even!” Or perhaps this tax break just did that? :)

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48 Zee April 1, 2014 at 2:59 pm

That’s an awesome surprise! Please do something both smart and stupid with the money. Prepaying taxes and saving are good but where’s the new motorcycle?!

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49 J. Money April 2, 2014 at 4:33 pm

The new motorcycle is coming in 6 weeks. It’s called a baby :)

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50 John C @ Action Economics April 1, 2014 at 3:12 pm

We got back about $1,900 this year. I don’t have the extra accountancy requirements of running a business so no quarterly filing for me (THANKFULLY!), but I work for multiple employers throughout the year. Finding the right balance of withholdings is difficult, especially since none of my employers offer a 401K and we put a good chunk of $$ into our HSA and traditional IRAs. I have a spreadsheet I use to estimate my taxes owed, which works pretty well.

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51 J. Money April 2, 2014 at 4:35 pm

$2k is nice! If you would have asked me a week ago if I’d be getting that I’d be thrilled! Especially when it come as surprises :)

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52 Anneli @thefrugalweds April 1, 2014 at 3:41 pm

Woooo hooo! Great tax windfall :-) And I totally agree – the $400 that we pay for our accountant is so well worth it in my book!
We’re getting totally killed in taxes (high income, no kids, etc.) while we’re not going to owe Uncle Sam – we gotta figure out a way to get a tax shelter. I’m excited to see how next year is going to play out since we’re going to factor in some business income. We’ll see how that goes.
It’s always so cool to find out how others a managing their finances, fluctuations and windfalls alike. If you don’t know how to strategically earmark your money, you’re going to end up losing it foolishly :-)

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53 J. Money April 2, 2014 at 4:36 pm

Check out this post by Go Currey Cracker! He makes $90,000+ and pays $0.00 in taxes!

http://www.gocurrycracker.com/the-go-curry-cracker-2013-taxes/

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54 Lance April 1, 2014 at 6:00 pm

I bet finding $11,000 is a pretty sweet deal! I’m sure it was a nice relief after this year from how it sounds.

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55 Kay April 1, 2014 at 9:51 pm

sweeeet! Can I send my tax stuff to your tax accountant? :)

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56 J. Money April 2, 2014 at 4:37 pm

I wish it were that easy! :)

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57 Brooklyn Money April 1, 2014 at 10:04 pm

That’s a lot of coin! I got about half that back thanks to my mortgage deduction.

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58 Lucas April 1, 2014 at 10:16 pm

Nice return! 11k is nothing to sneeze at. Baby #2 will help reduce taxes even more this year (although if you are doing more day care, those costs will go up). Out of curiosity do you track tax returns as a negative tax expense or a positive tax return income? Just reworking some of my tracking (back multiple years) and i have been tracking it as a negative expense because it is really an “overpayment” of an expense (similar to getting a refund on a purchase or something like that). But it makes my “expense” graph look kind of funny with dips into negative territory for several large tax returns like the one you just got.

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59 J. Money April 2, 2014 at 4:39 pm

I don’t really track it at all, but if I were I’d probably count it as a “positive tax return income” – mainly because once it’s out the door I don’t count on any of it coming back :) So it goes in the “nice surprise” section, haha… and same if it were a negative surprise too!

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60 Miles Dividend MD April 2, 2014 at 1:55 am

Even when we lose, we win!

Keep it up J!

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61 Marie @ My Personal Finance Journey April 2, 2014 at 2:22 am

Wow, $11,000 is a sweet refund! You really deserved it guys, and I’m sure your accountant was happy also, he really did a good job!

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62 J. Money April 2, 2014 at 4:39 pm

Thanks Marie :) It’s been a rough few biz months so it def. helps out.

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63 Amanda @ Passionately Simple Life April 2, 2014 at 8:12 am

Now that’s a nice amount to get back! It really pays to have an accountant when you have multiple situations to deal with!

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64 Mom @ Three is Plenty April 2, 2014 at 3:33 pm

We break about even between federal and state taxes – almost always owing the feds and almost always overpaying on the state (hopefully not this year, we made some W4 changes). I do my own taxes, but I have an accountant available to answer questions on an hourly basis when I have them (and so far, they’ve been worth their weight in gold).

I’m gonna say a 5 since I’ve never met you :P

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65 J. Money April 2, 2014 at 4:40 pm

It’ll be my job to get that number up to a 9 when all is said and done ;)

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66 Ryan @ Impersonal Finance April 2, 2014 at 4:21 pm

Kickin ass man. Well done. We’re getting about $600 back this year which is chump change compared to that. Hopefully I’ve done better this year with our taxes and finances so in 2015 we’ll get a larger sum (although likely nowhere close to 11k).

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67 J. Money April 2, 2014 at 4:42 pm

It may be chump change in comparison, but putting it next to any of my previous 6 years I’d gladly take that! We owed every single year *thousands* haha…

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68 Pengepugeren April 2, 2014 at 4:40 pm

We’re getting the equivalent of around 1,200 USD on Friday.
Every year it bothers me that I have to do my tax return and then wait for them to tell me the net result. Taxes should be so simple that a 4th grader could do it on a napkin.

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69 J. Money April 2, 2014 at 4:42 pm

THAT WOULD BE NICE!!

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70 Mario DebtBLAG April 2, 2014 at 5:03 pm

Oh that must feel amazing! Congrats :)

This was the first year that I made a year-long effort to get my withholding as close as possible, so this year’s was the smallest refund I’ve gotten in ages… So… uh… I’m supposed to feel happy about this, right? :/

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71 J. Money April 3, 2014 at 10:44 am

According to the the loan-haters, yes :) Hopefully you’re saving/investing this “extra” money!

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72 Sean Cooper, Financial Freelance Writer and Blogger April 4, 2014 at 6:37 pm

I’m envious that you’re in a refund position. Thanks to freelance, rental and part-time work, I owed $7K to the government. At least I budget during the year, so I don’t have to come up with the money all at once (although this year I’ve had to spend $25K in home renovations).

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73 J. Money April 7, 2014 at 10:35 am

Smart man! Gotta put aside a % of all extra income cuz the tax man does come a knockin’ later on… Hopefully you don’t get pinged with any penalties for not paying quarterly throughout the year.

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74 Rick April 8, 2014 at 12:45 pm

J. Money,

I have to disagree w/your accountant. You can contribute up to 4/15 into a Solo (I’ve done this every year since 2008) and setting it up via Vanguard is as simple as an online application. Easy Peasy…

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75 Rick April 8, 2014 at 12:58 pm

J. Money,

FYI, Here are 7 additional reasons for a Solo over a SEP. Ref: htttp://en.wikipedia.org/wiki/Solo_401(k)

===============================================================
Differences between a Solo 401(k) and a SEP IRA

Although both the Solo 401(k) and SEP IRA function as a retirement vehicle for self-employed individuals, the Solo 401(k) offers a number of features not found in the SEP.

1. It is easier to contribute the maximum amount in a Solo 401(k) because of the Salary Deferral component of $17,500, which is not available with a SEP IRA.

2. A Solo 401(k) Plan includes a $5500 catch-up contribution for plan participant’s over the age of 50, which is not the case for a SEP IRA.

3. A Solo 401(k) Plan can offer the owner Roth contributions, even in the case where the owner is otherwise not eligible to contribute to a Roth IRA due to the Roth’s annual income limitation.

4. Unlike an IRA[disambiguation needed], a special custodian is not required to be used. Most Solo 401(k) Plans can be structured as trustee directed plans, hence, the 401(k) plan account can generally be opened at any local bank and most financial institutions. Because this allows for faster and more economical transactions.

5. The Solo 401(k) allows for a personal loan[18] up to $50,000 or 50% account of the plan participant’s account value, whatever is less.

6. The Solo 401(k) is not required to pay UDFI on leveraged real estate, assuming the loan satisfied the rules under Internal Revenue Code Section 514.

7. Prohibited Transactions can be fixed in a Solo 401(k), while in a SEP IRA a Prohibited Transaction will often lead to the liquidation of the plan.

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76 J. Money April 8, 2014 at 5:05 pm

Very interesting! Thanks for pulling that for me – appreciate it.

And even more so that you can do it through Vanguard!! I literally JUST opened up my first account with them (SEP, of course) so I like hearing they offer solos as well :)

Just went back and nixed everything I said about solo stuff until I research it more… Y’all commenters are smart.

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