Why Investors Need to Pay Attention to Self-Directed Solo 401(k) Eligibility

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The Self-Directed Solo 401(k) plan can be a tremendous investment vehicle with which to build retirement wealth. Now, James Hitt of American IRA is explaining what investors need to know about eligibility for this type of account at the American IRA blog.

American IRA CEO

American IRA CEO, Jim Hitt

For many, the idea of a Self-Directed Solo 401(k) plan—with its high limits and tremendous protections—is perhaps the best way to build wealth, especially as an entrepreneur or a business owner.

One of the most powerful ways to build wealth for retirement is to utilize an IRA—this is common knowledge. And for many, the idea of a Self-Directed Solo 401(k) plan—with its high limits and tremendous protections—is perhaps the best way to build wealth, especially as an entrepreneur or a business owner. James Hitt, CEO of American IRA in Asheville, NC, recently went to the American IRA blog to let investors know who is eligible for these sorts of plans.

Maximum combined contributions for this type of account can be up to $54,000 in 2017, the article notes, which helps explain why this type of account is such a powerful way for people to invest. But since the Solo 401(k) plan was created for a very specific type of situation, Hitt notes, it’s important to understand just who qualifies.

“There are certain criteria that have to be met even to establish a Solo 401(k) or make contributions,” the article notes. “And it’s not always the best answer for growing companies.”

Those eligible for a Solo 401(k) plan include those with self-employment or owner-employee income—which means that an investor would have to show income from self-employment or a salary from a C-corporation, S-corporation, partnership, or LLC.

These plans are also for those who do not have full-time employees outside of the individual themselves and the individual’s spouse.

The good news, Hitt notes, is that there are no maximum income thresholds for these types of accounts, which helps expand eligibility as well.

“People have to know just what kinds of investment vehicles are out there,” Hitt says. “There are those in this specific situation who might quality for a Self-Directed Solo 401(k), and aren’t taking advantage of the high limits and tremendous protections. Still, it’s important for every investor to know who qualifies for such a plan—and who doesn’t.”

The article goes into greater detail, as well, pointing out what happens when investors start hiring full-time employees as part of their business. For example, Solo 401(k) plan sponsors are able to employ part-time employees and contractors and remain eligible for the Self-Directed Solo 401(k) plan.


American IRA, LLC was established in 2004 by James C. Hitt in Asheville, NC.

The mission of American IRA is to provide the highest level of customer service in the self-directed retirement industry. Mr. Hitt and his team have grown the company to over $250 million in assets under administration by educating the public that their self-directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.

As a self-directed IRA administrator they are a neutral third party. They do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents or representatives associated with these firms). They are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality profitability or reputability of any investment, individual or company. The term "they" refers to American IRA, located in Asheville, NC.

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