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Get $1,500 in Tax Credits over 3 years with a Solo 401(k) before December 31st

The Eligible Automatic Contribution Arrangement (EACA) offers small business owners and self-employed individuals $1,500 in tax credits for adopting a Solo 401(k) with auto-contributions enabled. That means you could potentially receive $500/year in tax credits for the first 3 plan years. Here's how you can take advantage of this benefit:

How It Works:

1. Set Up a Solo 401(k)
   Establish a new Solo 401(k) plan or update your existing one to include auto-contributions by December 31, 2024.

2. Enable Auto-Contributions (via Carry)
   During the setup process, select auto-contributions, typically set at 3% of your employee compensation. These need to be adopted within the plan documents. You can adjust this amount later by submitting an election form. (This is the process on Carry — check with your provide for more details).

3. Claim the Tax Credit
   File IRS Form 8881 with your taxes to receive a $500 credit annually for the first three years, totaling $1,500.

Why Auto-Contributions?

Auto-contributions are a default feature requiring a minimum 3% contribution of your compensation to the Solo 401(k). You can modify this percentage by submitting a Solo 401(k) election form. This flexibility allows you to increase, decrease, or even pause contributions while maintaining eligibility for the tax credit.

Who Qualifies?

• New Solo 401(k) Plans: Open a plan with a provider that supports auto-contributions.

• Existing Solo 401(k) Plans: Amend your plan to include auto-contributions by the deadline.

• Other Providers: If your current plan doesn’t support auto-contributions, you can restate your plan with a qualifying provider to meet the requirements.

Why Do I Need to Make an Election?

Without an election, you’re locked into contributing exactly 3% of your compensation as an employee. This can lead to taxes or penalties if you under- or over-contribute.

Making an election allows you to adjust your contributions and provides flexibility to contribute more, less, or nothing at all, while still receiving the tax credit.

For 2024, you can contribute up to:

• $23,000 if under 50

• $30,000 (including $7,500 catch-up contributions) if 50 or older

Optional after-tax contributions, such as for a mega backdoor Roth, can increase these limits further. There’s no penalty for contributing less than your election, giving you full control over your plan.

Why is The Government Offering This:

Beginning in 2025, most 401k plans must have the auto-contribution feature. The Eligible Automatic Contribution Arrangements (EACA) credit is being offered as part of the 2022 SECURE 2.0 Act to encourage small businesses to start adopting this feature into their 401k plans.

What is a Tax Credit:

A tax credit directly reduces your federal tax liability dollar for dollar, making it more valuable than a deduction. For example, the $500 annual credit can effectively lower your tax bill by $500 each year.

Cost vs. Credit: Carry Solo 401(k) plans start at $299/year. The $1,500 tax credit can more than cover the cost of Carry over the first 3 years.

What’s Happening at Carry?

Here’s what you can expect in the coming weeks

See the full list of events here. ⏰

No communication by The Vibes Company Inc. ("TVC"), or any of its affiliates (collectively, “Carry”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Any material provided is for information purposes only, and is not intended as a recommendation, offer, or solicitation to open a brokerage account, open a retirement plan, engage an investment advisor or engage in any investment strategy. The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. The appropriateness of a particular account or investment strategy will depend on an investor's individual circumstances and objectives.

The material in this email does not provide tax, legal, investment, or accounting advice. This is not an offer to buy or sell any security or to participate in any investment strategy. The strategies and/or investments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

A Solo 401(k)'s suitability depends on individual circumstances. This statement reflects our opinion based on the Solo 401(k)'s combination of high contribution limits, investment flexibility, and tax advantages for eligible individuals. "Most powerful" in this context refers to the potential for high contributions and tax-advantaged growth, not guaranteed performance. The actual benefits and suitability of a Solo 401(k) vary significantly based on individual circumstances, including income level, age, and financial goals. Other retirement accounts may be more appropriate in certain situations. This claim is not intended to imply superiority for all individuals or circumstances. Qualified financial and tax professionals should be consulted to determine the most suitable retirement strategy for your unique situation.

Eligibility, deductibility, and contribution limits for Traditional and Roth IRAs depend on IRS rules, income, and retirement plan participation. Traditional IRA withdrawals are generally taxed as ordinary income, while qualified Roth IRA distributions are tax-free. Early withdrawals may incur penalties. Traditional IRAs have Required Minimum Distributions; Roth IRAs do not. Advanced strategies like backdoor Roth and mega backdoor Roth conversions may be available but have specific rules and potential tax implications. Contribution limits, rules, and available strategies are subject to change. Individuals are responsible for the ongoing compliance of their plans with current IRS regulations. Consult a tax professional for personalized advice on basic and advanced IRA strategies. Carry does not provide tax or legal counsel. 

While Solo 401(k) and IRA plans may offer diverse investment options, including alternative assets, certain restrictions may apply. Some investments may be prohibited or result in penalties. Individual Plan administrators are responsible for ongoing compliance of all plans with Carry.

All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. Any material provided is for informational purposes only and does not provide personalized investment or tax advice, nor does it account for your specific financial situation or holdings elsewhere. Investments in alternative assets are speculative, generally illiquid and involve a higher degree of risk. Those investors who cannot afford to lose their entire investment should not invest in alternative assets. Before making any financial decisions, consult with qualified legal, tax, or financial advisors to ensure appropriateness for your individual circumstances.

Investment advisory services offered by Carry Advisors LLC ("Carry Advisors"), an SEC Registered Investment Adviser. While Carry Advisors internet-based advisory services are designed to assist clients in achieving customer defined financial goals, asset allocations and diversification do not guarantee a profit or protect against a loss, and past performance is no guarantee of future results. Carry Advisors does not provide tax advice. For more details, see our Form CRS, Form ADV Part 2 and other disclosures.

To open an Invest Account and/or receive advisory services from Carry Advisors, clients must also maintain an active subscription with The Vibes Company Inc. ("TVC"), which charges a subscription fee. Carry Advisors clients who subscribe to TVC are not charged an AUM (Assets Under Management) fee for advisory services provided through the Carry platform.

TVC is an unregistered affiliate that provides financial technology solutions, general financial education, and assistance with Solo 401(k) setup and administration. TVC does not offer financial, legal or tax advice. Customers who open a Solo 401(k) through TVC but choose to invest through other providers outside the Carry platform may incur AUM or other fees from those providers.

Unless otherwise noted, statements regarding individuals' experiences with Carry were made by customers who, at the time of their statements, did not receive any cash, non-cash compensation, or other benefits in exchange for their feedback. These results and experiences may not reflect those of all Carry customers and do not guarantee future performance or success.

Carry is a financial technology company, not a bank or FDIC-insured depository institution. Banking and depository services for Carry Solo401k accounts are offered by Grasshopper Bank, N.A., member FDIC. Accounts offered by Grasshopper Bank, N.A. are FDIC insured up to $250,000 per account but do not yield interest. Fees effective as per the date on the applicable rate sheet and subject to change without notice. Banking fee schedule here. Grasshopper Bank, N.A. is not affiliated with Carry and accounts offered by Grasshopper Bank, N.A. are not serviced by Carry Advisors.

Certain in-app brokerage accounts are offered and maintained by DriveWealth LLC ("DriveWealth"), member FINRA/SIPC. Securities in your DriveWealth brokerage account are protected by the Securities Investor Protection Corporation (SIPC) against custodial loss up to $500,000, including a $250,000 limit for cash.

IRA plans are offered by DriveWealth, LLC and opened via the Carry platform. Additional fees may apply to certain services provided by DriveWealth. See DriveWealth Fee Schedule and DriveWealth's Disclosure Statement for more information.

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If you want more resourceson building wealth as a solopreneur/entrepreneur, check these out:

• The Solo 401k handbook

• The Roth IRA handbook

• The Self-Directed IRA handbook

• The Guide to Paying Less in Taxes

• What is a Solo 401k?

• How to Open a Solo 401k