Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  My client has a Solo 401K plan for his sole proprietorship.  Can the plan invest in an annuity?

Answer:  Yes, so long as any third party plan administrator (if there is one) allows the investment.

Pension plans limit the amount of life insurance that can be owned on the participant.  There are no such limits on annuity contracts.

If the plan owns an annuity, it must be a nonqualified annuity and it must be titled in the name of the plan.  This is different from how an IRA-based plan—like a SEP or SIMPLE IRA—would work.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.