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What is a Solo (CB)?

A Solo (cb) plan is designed for self-employed individuals with stable surplus income or those who have recurring consulting income in addition to their regular employment wages who are interested in increasing their tax-deductible retirement plan contributions beyond the limits of a Solo(k) plan. Because cash balance plan is a type of a defined benefit plan, it allows a rapid retirement savings build up of up to $2 million. It is generally used for individuals who target total retirement contributions of at least $70,000 per year and can be used alongside a Solo(k).

A Solo(cb) plan (a one-participant cash balance plan) is a cash balance defined benefit plan created specifically for self-employed individuals. Because Solo(cb) is a pension plan, it affords the opportunity to take advantage of retirement and tax limits which may not be accessible in another retirement plan.

A Solo(cb) plan is frequently called a hybrid plan because in many ways it resembles a 401(k) plan. In a Solo(cb) plan your ‘account balance’ (your plan benefit) grows from two sources: a pay credit and annual interest credit. Both pay credit and interest credit are specified (or ‘defined’) in the plan document and are subject to IRS guidance. Interest credit is guaranteed and independent of the plan’s investment performance. When it’s time to distribute the funds out of the plan, your cash balance plan ‘account balance’ may be moved to another tax-advantaged account to defer taxation until distributions are needed.1

A Solo 401(k) may be right for me if...

If you have substantial recurring surplus income from self-employment and any of the below statements apply to you, you may be a candidate for a Cetera Retirement Plan Specialists Solo(cb):

  • I am an owner of an unincorporated business that employs only me or me and my spouse
  • I am a partner in a partnership that employs only partners or partners and their spouses
  • I am a sole owner of a corporation (or an LLC taxed as a corporation) that employs only me or me and my spouse
  • One of the statements above is true and my business has part-time employees, but none of them have ever worked 1,000 hours in a 12-month period starting with their date of employment

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