The reason recommendations to solo 401k plan are covered by Reg BI is because a solo 401k plan is an owner-only plan. Recommendation types include how to invest the solo 401k funds and, more importantly, rollover recommendations (i.e., to rollover the solo 401k fund to an IRA).
Here is what the SEC says:
“Best Interest to expressly apply to account recommendations including, among others, recommendations to roll over or transfer assets in a workplace retirement plan account to an IRA, … and recommendations to take a plan distribution for the purpose of opening a securities account…”
The 2021 annual IRA contribution limits were recently released by the IRS and are found in Notice 2020-79.
Here are the IRA contribution limits for 2021:
Traditional and Roth IRA contributions: $6,000 (unchanged)
Traditional and Roth IRA catch-up contributions: $1,000
The ability to do deduct the IRA contribution amount is based on your earned income. The deductibility phase-out for single taxpayers participating in employer plans such as solo 401k plans increased in 2020 to $66,000 to $76,000 (in 2019, it was $65,000 to $75,000)
If you are married and file a joint Form 1040 tax return and participate in an employer plan such as a solo 401k plan, the IRA deductibility phase-out increased to $105,000 to $125,000 (it was $104,000 to $124,000 in 2019)
IRA deductibility phase-out for married with spouse an active participant in employer plan such as a solo 401k plan increased to $198,000 to $208,000 (in 2019, it was $196,000 to $206,000)
Roth IRA income limitation for determining maximum contribution for married joint filers: phase-out range rises to $198,000 to $208,000 (was $196,000 to $206,000)
Roth IRA income limitation for determining maximum contribution for single filers and heads-of-households: phase-out range rises to $125,000 to $140,000 (was $124,000 to $139,000)
First Make the IRA Contribution to your Self-Directed IRA
Lastly, for those IRA account holders who have IRA LLCs (aka checkbook IRA), don’t forget to first make the annual IRA contributions to your self-directed IRAs before investing them in your IRA LLCs.
While the odds of SECURE Act 2.0 passing in 2020 is slim, it is still worth noting for 2021 as it may pass once the presidential election is finalized. As the name implies, the purpose of the proposed addition to the Act is to build on the the already previously passed SECURE Act from December 20, 2019.
“COVID-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security,” Neal said in a statement upon introducing the legislation. “With the Securing a Strong Retirement Act, Ranking Member Brady and I build on the landmark provisions in the SECURE Act and enable more workers to begin saving earlier—and saving more—for their futures.”
Here ae the items found in the proposed SECURE ACT 2.0
Require automatic enrollment of eligible employees in 401(k), 403(b) and SIMPLE IRA plans with certain exceptions and grandfathering provisions.
Modify the credit for small employer plan startup costs.
Increase the amount of, and eligibility for, the “saver’s credit” for taxpayers making IRA contributions or deferral contributions to employer-sponsored retirement plans.
Exempt up to $100,000 of accumulated retirement account balances from required minimum distribution (RMD) requirements.
Reduce the penalty for failure to satisfy RMD requirements from 50% to 25%; if an IRA RMD failure is timely corrected, the penalty would be further reduced to 10%.
Permit 403(b) plans to invest in collective investment trusts
Increase the RMD age to 75.
Provide for indexing of IRA catch-up contributions.
Provide a second, higher tier of catch-up deferral contributions for those age 60 and older, with indexing provision.
Allow certain student loan repayments to be paid with employer match funds.
Provide a new small employer tax credit for enhanced plan eligibility for military spouses.
Enhance options for correcting employee contributions.
Permit increasing payments in IRA and defined contribution plan life annuity benefits.
Expand the IRS retirement plan correction program to permit self-correction of certain inadvertent IRA errors.
Permit tax-free qualified charitable contributions to be made from employer-sponsored retirement plans (now permitted only from IRAs).
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