How to Invest in Startups Using Your Solo 401k with Carry

Discover how you can leverage your Solo 401k with Carry to invest in startups, maximizing your retirement savings and fueling innovative ventures.

Understanding the Solo 401k Plan

A Solo 401k plan is a retirement account designed for self-employed individuals and business owners with no full-time employees other than themselves and their spouse. Unlike traditional 401k plans, a Solo 401k offers greater flexibility, including the ability to invest in a wide range of asset classes beyond stocks and bonds.

Introducing the Carry Solo 401k Plan

The Carry Solo 401k Plan is a feature-packed self-directed retirement account that empowers you to take control of your investments. With just a few clicks, you can:

• Invest in both traditional and alternative assets, including startups and real estate.
• Take out a loan against your retirement savings.
• Execute a mega backdoor Roth conversion to maximize your tax-advantaged growth.

Benefits of Using a Carry 401k Plan for Startup Investments

Investing in startups through your Carry Solo 401k offers several advantages:

Tax Benefits

One of the most significant benefits is the potential for tax-free growth. By investing through a Roth Solo 401k, your earnings are not subject to capital gains tax, allowing your investments to grow more efficiently over time.

Higher Contribution Limits

The Carry Solo 401k Plan boasts higher contribution limits compared to traditional Roth IRAs. For 2025, you can contribute up to $70,000, significantly increasing the capital available for your startup investments.

Diversification

With the ability to invest in alternative assets like private companies, you can diversify your retirement portfolio, potentially enhancing returns and spreading risk across different asset classes.

How to Invest in Startups with Your Carry Solo 401k

1. Ensure Eligibility

To invest in startups using your Solo 401k, you must be an accredited investor. This status is automatically granted if you meet any of the following criteria:

• Income Requirements: Annual income of $200,000 or more (single) or $300,000 or more (joint) for the past two years.
• Net Worth: A net worth exceeding $1 million, either individually or jointly with a spouse.
• Professional Credentials: Holding a Series 7, Series 65, or Series 82 license and being registered with a regulatory body.

2. Choose a Self-Directed Plan

Only a self-directed Solo 401k allows investments in startups and other alternative assets. Major banks and brokerages typically offer prototype plans limited to traditional investments. Therefore, it’s essential to select a non-prototype Self-Directed Solo 401k provider like Carry.

3. Follow IRS Rules

When investing through your Solo 401k, adhere to IRS regulations to avoid prohibited transactions:

• Avoid S Corporations: Your Solo 401k cannot invest in S corporations.
• No Disqualified Persons: Ensure that your investments do not benefit disqualified persons, including yourself, your spouse, and certain family members.
• Non-Self-Dealing: Your investments should not involve any personal gain beyond your retirement account.

4. Execute the Investment

Once eligibility and compliance are confirmed, you can proceed to invest in your chosen startup. The investment will be made in the name of your Solo 401k plan, ensuring that all activities remain within the retirement account framework.

Success Story: Peter Thiel’s Roth IRA Strategy

Peter Thiel exemplifies the potential of using a retirement account for startup investments. In 1999, Thiel invested $1,700 from his Roth IRA into 1.7 million shares of PayPal. This investment grew exponentially, eventually contributing to the formation of a $5 billion Roth IRA portfolio, all while avoiding capital gains tax. By leveraging a Roth Solo 401k, you can replicate a similar strategy with even greater contribution limits.

Getting Started with Carry Solo 401k

Investing in startups through your Solo 401k with Carry is straightforward:

1. Open a Solo 401k Plan: Start by setting up your Carry Solo 401k account online with ease.
2. Fund Your Account: Make contributions up to the allowed limits to maximize your investment potential.
3. Select Investments: Choose the startups or alternative assets you wish to invest in.
4. Monitor and Manage: Use Carry’s platform to manage your investments and track their performance.

Conclusion

Utilizing your Solo 401k with the Carry 401k plan offers a powerful avenue to invest in startups, providing tax advantages, higher contribution limits, and portfolio diversification. By following the appropriate steps and adhering to IRS regulations, you can strategically grow your retirement savings while supporting innovative new ventures.

Ready to take control of your retirement investments? Start your journey with Topy AI today!