Create Your Security Deposit Receipt Template for R&D Effortlessly

Security deposit receipt template for R&D

good morning everybody thank you for uh joining another one of our daily webinars here this morning we have two webinars per day we're going to have a second one at 1M Pacific time so in a few hours well let's get started on this busy December month so this webinar is for educational purposes we're not uh providing legal or tax advice or financial advice you can also visit our community where we have uh recordings for daily webinars as well as a large library of videos covering solo 401K plans as well as IRS and business financing 401K plans our community address is my solo 41km my community we have uh thousands of forums there too we have over 30,000 members let's talk about the um benefits and the features of a solo 401K plan so you can you can benefit from a from a solo 401k plan in many ways um and when you open a solo 401k plan through our company my solo 401K Financial that setup happens rather quickly especially here in December as soon as you fill out our online application we generally turn the plan documents over to you within hours for for your signature and that'll establish the plan and then proceed with uh funding which can usually happen quickly as well including the setup of the holding account for the plan for example a brokerage account at Fidelity that can be open up online some of the benefits of a solo 401k plan is the ability to reduce your taxable earned income for the year and you can do that by making pre-tax contributions to the plan and then of course if you're looking to um get Roth money into the plan whether it's by making a Roth solo 401k contribution or a voluntary after tax contribution which can then be converted to the Roth solo 401K that's a way to uh really grow your solo 401k taxfree and then the contribution options are also flexible and other words you can choose to make pre-tax contributions as well as WTH and voluntary after tax or a combination of the three or just one or the other many of our clients that are trying to supersize or supercharge their Roth money will make the entire contribution as a voluntary a tax contribution up to the overall limit of $69,000 and then immediately converted to the ra solo 401K so that's that's that's uh very flexible option and then of course you can make catchup contributions to the plan we'll we we'll talk about that more here as we proceed so the uh the solo 401k plan that we offer is self-directed and it also comes with the auto contribution tax credit built into it therefore resulting in being able to take a dollar Ford dooll deduction of $500 starting here in 2024 and then continuing into 2025 and 2026 for a total of $1,500 over those three years it's also good to note that existing solo 401K clients also qualify for the tax credit so if you need that tax credit added to your plan send us an email at business myolo 41. and we can um shoot over the procedure for that the plan documents would need to be updated um of course our plan does come with the checkbook feature Which is popular for those that are investing in alternative Investments whether it's real estate uh precious metals promiser notes to name a few and that those Investments can also be placed by wire as well so you don't have to use a checkbook however it's part of the feature and and and that's available to both the brokerage accounts whether it's at Fidelity or Schwab and also bank accounts and the reason that's available is because it's our plan that allows for alternative Investments so you you would be opening a plan with us as the plan provider but you but we allow you to use the financial institution of your choice to hold the funds and then of course we uh charge a flat fee of $125 each year and we don't charge any type typ of uh asset under management fees because we're not managing your funds neither will the brokerage firm whether it's Fidelity or schab they won't charge you any type of fee to hold those Securities in your account with our plan you can also invest in virtually any type of investment that you wish as long as it falls within the Consignments of the law Investments can be from traditional invest like equities uh index funds exchange traded funds bonds CDs to Alternative Investments whether it's real estate such as commercial properties family residential homes to cryptocurrency that's a pretty hot one now and then of course notes metals and Private Stock and some other ones are tax leans for instance so with the with the solo 401K that you that's open with our institution um we can help you open up the brokerage account if you go that route for the plan over at Fidelity and it can be done online and it can be integrated with payroll you can use payroll companies such as Gusto ADP paychecks rling or any other U payroll providers alternatively you don't have to use a payroll provider you can simply make contributions directly to the plan from your business or or personal bank account as long as you've got the necessary self-employment income to support that contribution and if you use a firm like Fidelity to hold the funds you can actually link your business or personal bank account to those Fidelity brokerage accounts and the contributions electronically via AC I'm going to send over a link from our website that sheds more light on that with respect to uh making contributions into a plan if you use a brokerage firm like Fidelity to hold the the funds for the solo 401k plan that we offer okay let's see here shoot that over and of course the solo 401k plan does allow for participant loans where you can borrow from the plan you can borrow 50% of the balance not to exceed 50,000 you you make payments to the plan so you're paying back your own plan and those are paid monthly or quarterly five year term is the typical uh term period it can increase to 1530 years if you're going to use the proceeds towards the purchase of your primary residence there's no credit check it's not a distribution it's a loan so as long as you pay it back it's not going to subject you to taxes or penalties and we provide those loan documents generally within an hour excuse me within a day when you're ready to process the loan we do offer comprehensive plan support and that's included in our annual fee of $125 so in addition to charging $125 for being the solo 401K play provider which is our main role we also provide comprehensive compliance support whether it's preparing and file in Form 5500 easy electronically with the government to prepare in form 1099r which also gets filed with the IRS and a copy goes to you for filing with your personal tax return and that's used for reporting conversions and distributions and of course we provide support bya email daily webinars you can also schedule calls you can also uh use our community we have people posting forums all the time we're very active there and then of of course we have a uh artificial intelligence for the solo 401K found right there on our website where you can ask our AI uh database questions thei the AI bot let's talk about eligibility because not everybody qualifies for a solo 401K so who's going to be eligible to uh set up a solo 401K plan well you have to be an owner and an employee in the business and you cannot have any full-time W2 employees in your business other than yourself business partners or your spouse so the um threshold for a full-time W2 employee is someone that works ,000 hours or more so the individual is not an owner in the business he or she is a common law employee and works a th000 hours or more if you have an individual that meets that requirement then or that that meets those hours then you would not qualify for a solo 401K so those individuals need to work less than a thousand hours in order for you to be able to open a solo 401k plan again if you have other owners in the business as long as they're owners and employees in the business they can also participate in the plan but they're not required to but that would not keep you from being eligible to set up a solo 401k plan which is sponsored by the self-employed business here's a good solo 401K eligibility checklist which we also can it can also be found on our website I'll send that link over we have some great Q&A on that page as well um but let's go over some of these as well so I just went ahead and uh sent that link to that page over um we'll go over some of these so the first one there do I need a separate entity no you don't which means that it can be a s proprietorship so many of our clients are independent contractors so they receive a 1099 NEC and then they file a Schedule C and attach it to their form 1040 so as long as you're performing material Services doing the work and you meet those other requirements I mentioned earlier to open a solo 401k plan then it doesn't have to be a formal entity it can be a sole proprietorship do I need to report earn self-employment income on my taxes well again you need to be performing material services to qualify for a solo 401k plan so it cannot be investment income it cannot be Schedule E income Which is popular for Real Estate um so yes you got to report whether it's a net profit or net loss if we're talking about a Schedule C you would report that on line 31 then of course if the entity is taxed as a S Corp or C Corp you would need to file a W2 to report those wages for material Services performed in the business and then of course there's other reporting that goes into play on the business tax return um can I set up a solo 401K even if I also have a W2 day job yes you can so a large population of our clients are in that same category where they contribute to their daytime employer plan and then they also have a self-employed business on the side and set up a solo 401k plan for that business and make contri contributions to the solo 401k plan based on their net self-employment income from that business the self-employed business and that's very common especially for professionals like doctors and attorneys where they'll contribute to their daytime job and then they'll go ahead and do a mega back door using the solo 401k plan where they'll contribute let's say 69,000 doar which is the overall limit for 2024 they'll contribute to the solo 401K based on their net self-employment income from their side business and they can do that even if they've maxed out their daytime job contributions so that's why it's so popular let's go over one more on this checklist do I need an EIN for my self-employed business you don't I mean generally if it's a sole proprietorship where you're doing business under your name you typically use your soul for your for reporting on the schedule C and for the bank account for your business don't confuse that though because the solo 401k will need its own EIN number because the solo 401K is a separate entity it's a retirement trust so it needs to have its own separate EIN number which will obtain as part of the setup process so you cannot use your social or if you have an LLC self-employed business you cannot use that self-employed business businesses Ein for the solo 401K so bottom line just to be clear here the solo 401K is a retirement trust therefore it needs its own separate Ein which is going to be important not only when opening the holding account for the plan that is the bank account or brokerage accounts but also when we perform form 1099r reporting the Ein for the plan gets used on the form 1099r now your business buiness if we were to list your business EI in on that $199 that's going to cause confusion with the government and it might trigger some type of compliance check okay let's move on here so we've got some scenarios here as to who might want to open a solo 401k plan one we got someone who's Frugal The Frugal investor so that's that's why it's great that the uh due to secureity 2.0 now you can get a $1,500 solo credit for opening a solo 401k plan or for having an existing plan again existing plans also qualify but the plan would need to be updated to allow for it but if you're looking to open a solo 401k plan for the first time the $1,500 solo 401K credit will actually um pay for the plan for many years to come because the five because it's it's it's $1,500 in total so it's $500 per year so 2024 2025 and 2026 in $500 [Music] increments and we actually did a a um we actually had a a post published recently on um the solo 401K tax credit let me pull that up here you might be interested in reading that it was uh ritten by our my my my colleague George he'll be doing a webinar today at 1 p.m Pacific time but take a look at that one because that one there is a good one it um really clarifies the difference between the solo 401K tax credit and the solo 401K Auto contribution credit I know a lot of tax professionals are not privy to the auto contribution credit being available to the solo 401k and they confuse it with a different credit so this article that I just shot over that link puts that to rest so again the RO the solo 401K is also great for maximizing your Roth 401K funds and that can be done by making a voluntary after tax contribution of 69,000 provided you've got the necessary self-employment income to support that contribution and then immediately converting it to the ra solo 401K that's why it's dubbed to Mega back door Roth solo 401k and then you can also make a Roth solo 401k contribution that's the catchup amount of 7,500 for those age 50 or older so that Roth solo 401k contribution if it's made as an employee contribution always has to go into the raw solo 401K not the voluntary after tax bucket and then if you have a large account or if you plan to consolidate your existing retirement funds whether it's Ira former employer plans and so forth the solo 401K is often used for that as long as you qualify to open the plan and I'm going to send over a link from our website that lists a number of type of plans that can be transferred to the solo 401k if I can dig it up here if if not I'll send it over a little bit later as we continue here but the um a Form 5500 easy with applies if the value of the solo 401k plan is greater than 250,000 and we take care of uh preparing that Form 5500 easy for clients who request it so keep in mind we never have access to your funds so is important to communicate with this once the value of the plan is greater than 250,000 so that we can assist with that for 5500 easy preparation many of our clients like to invest in alternative Investments whether it's real estate cryptocurrency precious metals nodes private syndicates our plan is oftentimes used for that and you can do that even if you um choose to open up the brokerage account for the plan over at Fidelity or Schwab that's because it's our plan that allows for it you're not opening a solo 401K with Schwab or Fidelity you would be using them if you chose to to hold the funds or you can use a bank account the bank account won't allow you to invest in equities so it's not quite as robust as having a brokerage account that allows for both so again with the with the solo 401K that we offer it allows for 401k participant loans let me shoot over a link on that that goes over the rules and we prepare those loan documents as part of our service and no additional fee will help you calculate that loan you'll be able to make payments to your to your plan so you're not paying us or the bank or The Brokerage from you're paying back your own plan let's talk about the super catchup contribution which is a Hot Topic right now and I'm sure it'll continue to um be popular I'll send over a link as well that from our website that really delves into that the super catchup contribution we did a good webinar on that about a month back so we've got the secure 2.0 section 109 to think for the um super catchup now the super catchup is not available to everybody you have to be aged 60 61 62 or 63 in order to take advantage of it and if you if if you if you meet those age requirements then instead of contributing $7,500 as a catchup contribution you can contribute $11,250 and that starts in 2025 so it's for tax year 2025 not tax year 2024 if you're now again you have to meet those age those age requirements there to to qualify for the super catchup if you don't that's fine you can still do the 7,5 $0000 catchup if you're under age 60 but but age 50 or older so that that doesn't go away and this light here light on that on the um normal catchup versus a super catchup so you can't if you're age 60 61 62 or 63 you can't also do 7,500 so you can't say oh I'm going to do 11,250 and also another 7,500 no it can only be one or the other of course you can do 10,000 or 11,000 or 8,000 just not an addition and this chart here is a good one here it talks about um who qualifies for that super ketchup and who doesn't and again this chart is referenced in that link page that I sent over earlier so again um that that that concludes this um review here we're going to go over some questions here in a minute again you can um follow the conversation on our community that's my solo 41. my community forums and um we've got all kinds of videos forums it's got over 30,000 members all kinds of blogs BLS from advisers that post on there so take a look at it let me send over a link to it as well also take a look at our artificial intelligence for the solo 401K let me send that over as well so we've got plenty of knowledge all spread all over the place our community our uh AI our website we've been around since 2009 we've got thousands of clients so over that over those over those years we've posted a lot of good information out there so here's the link to the AI where the only AI in the industry for the solo 401K okay so let's fill some questions here so we've got Kelly over here is the credit only for the fees for the solo 401K for instance the my solo 401K annual fee no it is not so as long as you you are reporting self-employment income then the tax credit it's known as the auto contribution credit is taken on the business side so no there's no um it's not based on how much you pay for the annual fee or how much advisor fees you pay so whether you pay $650 to set up the plan that doesn't mean you're not going to qualify for that $1,500 credit spread out over three years start in 2024 2025 and 2026 so that's what's great about it let me send over a link as well to the that goes over the that solo 41k credit and more dep and it's got some good q&as on there that will help you um um review it see if pull that up here um okay so take a look at that let's take a look at the next question here from will you follow 5500 as well yes as long as you notify us that the market value of your solo 401k plan is greater than 250,000 we'll prepare that we'll add you to our annual preparation list we don't have access to your funds so you need to let us know once your plan re reach is that threshold so that we can prepare it and file it for you electronically with the Department of Labor give me one moment here please give me one moment here okay thank you another question Here For Real Estate will trigger unrelated business income tax good question so generally it does not so there are two types of tax that may apply when you're investing in real estate one is called unrelated debt Finance income tax the other one is referred to as unrelated business income tax and I'm going to send over a link that goes over the two and I'll talk about it some more as well and we also did a podcast with a professional who's an expert in ubit and udfi Mr Hamilton let me send over that um podcast so he's an expert at it so he might be someone to reach out to down the road as well if you go down this path but related business income tax usually applies to business activity so for example if you invest your solo 401K in a private company that's set up as a limited liability company and that company is a shoe store so that company is in the business of selling shoes that's going to trigger unrelated business income tax because that's not consider a passive investment so Congress created unrelated business income tax to even the playing field between those individuals that don't use their retirement funds to invest in that type of active business again the shoe store as an example versus those that do so that that type of investment would trigger unrelated business income tax to the solo 401k if that entity is an LLC for instance now in the context of real estate it might be triggered as well and how how is that well if you flip real estate inside a solo 401K why because a solo 401K was created just like an IRA for passively investing where you invest in an investment where the funds are where the investment is growing and returns are coming back to the plan for example if it's a rental property that's a Buy and Hold that's owned by the plan and Rental income is coming in that's considered passive because it's because you're not flipping the property you're actually holding it for longterm but if you flip that property inside the plan that's going to trigger unrelated business income tax if you're doing it consistently or if that's the only activity you're doing inside the solo 401k plan so let's say you're flipping three or more properties inside the solo 401k plan and you do that within a year that's going to trigger under related business income tax because you're actually flipping the property you're not it's not being held in the plan now there's a consensus out there in the industry that you can probably get away with flipping one or two properties in the plan but I mean you you definitely don't want to flip any more than that and you also want to make sure you're investing in other items with your solo 401k plan that just flips so maybe you're also investing in equities or some Buy and Hold properties as well or metals or crypto but not just solely flipping otherwise that's probably going to trigger unrelated business income tax now the other tax is called unrelated debt Finance income tax that does not apply to solo 401K plans that utilize a non-recourse loan to invest in real estate where the loan is to the solo 401K you use those proceeds to invest in the property so that doesn't trigger unrelated dead fundance income tax okay let's look at some more questions here my accountant told me I don't qualify for this can you tell me if there's an income threshold well I mean if you're working with your CPA I'm sure here or she understands your self-employment picture very well but I'm going to send you a link from our website regarding the solo 401K eligibility requirements but essentially it can be part-time there is no threshold amount I mean in some years you may not have any earned income because the business didn't do well you had more expenses the key again is that you're doing the work material Services if you look at IRS publication number 560 there's a there's a section there that talks about performing material services and you're going to notice it doesn't say you have to work 10 hours a th hours it simply states that you need to be doing material services so that's the um that's the key you're doing the work you're reporting as such it's got nothing to do with how much money you're making again look at IRS publication number 560 let's take a look at another question here got a question here from Mike for LLC partnership setup me and my brother are the only partners and employees is the contribution based on the wages or LLC income so it depends if that LLC is taxed as a partnership then contributions are going to be based on each partner's respective um form 1065 schedule one self-employment income I'm going to send over a link on that you're going to want to look at box uh 14 code a of that schedule K1 it's titled self-employment income that's what the government will look at to connect the dots to see if you qualified for that contribution so each of you would need to have a separate schedule K1 and Report self-employment income separately on that schedule K1 line 14a now if the LLC is taxed as a so proprietorship then it's going to be based on your SK your respective schedule C's so each of you would have a separate Schedule C under the uh partnership and it's going to be based on line 31 of each Schedule C to determine whether or not you've got enough net self-employment income to make a contribution I just sent over a link that talks about that if it's an LLC tax is an S corporation then it's going to be based on your respective W2s line one of the W2 the gross wages let me send over a link on that again all this great information is right there on our website if you spend an hour on our website you're going to find all kinds of great stuff I mean even 5 minutes but if you spend an hour you're going to become an expert um here we go another question here from Shaw if wife has another business in a different area can the husband who is H owner of the LLC can the husband set up his solo 401K so if wife has they freaking the husband yeah so if you are um if you have your own self-employed business where your spouse is not working in that business and your business does not do work with your spouse's business especially if your spouse has a business that employs full-time W2 employees which means she could not she would not qualify to set up a solo 401K then you can set up a solo 401k and participate but your spouse cannot so the key is that those businesses are completely separate in other words you're not doing work for her business she's not doing work for your business employees of her business are not working for your business you're not you your business is not using Serv uh Services of her business like like property owned by her business and that's if her business has has W2 full-time full-time W2 employees because again you cannot open a solo 401k plan if your business employees full-time non-owner W2 employees common law employees that work $1,000 or more that's for qualifying for the solo 401K okay all kinds of good questions here today on December 10th got want to hear from Nick do you have a link for contributing to solo 401K using Schwab we sure do seems like it's a bit different from Fidelity yeah you're exactly right they are asking for the funds to arrive from the bank belonging to the entity you're exactly right that's one of the reasons our clients like to use Fidelity instead I mean Schwab is good too but the biggest pet peeve I get is that Schwab doesn't make it as easy to contribute to the plan as Fidelity does as a matter of fact let me send over first information about the Schwab how to contribute when you use Schwab to hold the funds um I'm also going to send a great link from our website first that compares Fidelity versus Schwab if you use them for the holding accounts the brokerage accounts for the plan that we provide um but let me look for um so here's a link here that talks about making contributions using Schwab but yeah they're not quite as friendly as Fidelity is I wish they would change that process and make it easy um let's see here okay so take a look at that if that doesn't answer your question shoots an email at business at my solo 401k.to real estate flipping company well I mean that's that's a loaded question I can spend 30 minutes just going over that shoot me an email at business myolo 401K we'll talk about it more but let me give you a little taste so one if if the if the real estate flipping company is owned by you or any of your family members that's prohibited you you won't be able to invest your solo 401K in that entity that's a prohibited transaction now if you're not an owner or manager officer or director in that entity your solo 401K can loan money to that entity as a promissary Noe investment and secur by real estate let me send over that promis every note procedure and that's going to be considered a promisory note not not an equity investment and as a result you won't have to worry about ubit um but if you're talking about your solo 401K invested in an entity that flips then as I mentioned there that well that's going to be prohibited if you're also involved with that entity or if your family members are so again this type of question that's a loaded question there's a lot of FS buts you're pushing the envelope so you generally don't want to push the envelope with your retirement account I mean if it's if the RS finds it to be a prohibited transaction that's going to implode your retirement account if you're admin about doing it in a retirement account then maybe do it through a self-directed IRA where you put some of your for transfer some of your 401K money into that self-directed IRA and do the investment through the self-directed IRA so that way if that if it's de a prohibitive transaction it's only going to infect and impact those funds in that particular self-directed Ira so that's a way to isolate and that's good for people that are trying to push the envelope I mean there's there are plenty of other ways to invest in real estate without pushing the envelope okay next question here a lot of great questions so another one here from Nick how does the process of doing the mega back door work I want to contribute 69,000 this year do I simply just deposit that sum in the after tax retirement account you open for me well I need to notify with this deposit or the funds deposited converted into Roth automatically upon being created so yes as soon as you make that contribution to the voluntary after tax account which is going to be based on your net self-employment income from your business you're going to want to complete our online conversion form so that we collect the necessary information to issue that form 1099r to report the non- taxable conversion and I'm going to send over our forms tab here you can find the form there it depends on whether you convert it to the raw solo 401k or the raw Ira so you want to use the appropriate form but as soon as you contribute and move those funds over to the holding account the Roth holding account within the plan so obviously you need a separate holding account to hold the voluntary after tax funds and then a separate account to hold the Roth solo 401K funds you then convert from the U after tax to the solo 401k or the Roth IRA I'm going to send another good procedure here I thought I had it on my fingertips regarding how the process works when you're converting voluntary after tax solo 401K funds um see if I can find it here quickly um yeah I can't find it here quickly um let's try one more time here I had it bookmarked it's going to bug me if I can't find it give me one moment here um here it is this one has all the steps outlined this is a good one okay so next question here okay Shaw is very active today on the Q&A that's great can we roll over IRA and Roth IRA into solo 401K we got we got this question yesterday too so no you cannot transfer a Roth IRA to the solo 401K you can transfer the traditional IRA to the solo 401K but not the Roth IRA and that's because the Roth IRA regulations do not allow for the transfer of a Roth IRA to the Roth solo 401K so it's a rothay regulation not a solo 401K rule here's a link that sheds more light on that you can go from a Roth solo 401k to a Roth IRA if you meet the triggering events but you can never go from a Roth IRA to a Roth solo 401K okay it looks like um that takes care of all the q&as today that's great participation again we're going to go live again at 1M Pacific today and we'll be going live twice a day for the rest of the month so keep bringing your great questions and make get a good Wednesday take care or Tuesday I should say e e e e e e e e e for