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If you have freelance income and want to funnel your retirement savings in the economy, is organizing a cohort of 100 folks to set up self-directed solo 401ks by the end of the year. Check this form for more details and to sign up to be part of the cohort! docs.google.com/forms/d/e/1FAI

@mattcropp

Do you have any idea why they are going with solo 401ks, rather than self-directed IRAs? There must be some benefit, right?

@GuerillaOntologist My understanding is that they are cheaper/lower overhead, b/c you can self-administer once you havea plan doc, while SDIRAs require a custodian (paperwork + fees). I have an SDIRA through work, and it sounds like they will be doing a cohort for that model soon...

@mattcropp

Interesting. And I take it that it must be possible to use solo 401k funds to invest in local co-ops/enterprises. I'll be looking forward to seeing how it works out. I'm no fan of 401k plans generally (hey, let's gamble with your retirement savings!), but if someone can figure out how to do it better, it's probably the SELC and LIFT.

@GuerillaOntologist There was a webinar recently, and it was useful to learn about a bunch of different retirement vehicles. Apparently traditional 401(k)s are challenging for co-op investment because all investments are legally required by ERISA to be liquid on a quarterly basis, while that's not true for solo 401(k)s (or the various form of IRAs, which makes them the way to get tax-preferred savings working in the solidarity economy...

@mattcropp OK, now the reasoning becomes clear. Avoiding that ERISA requirement is a big deal.

@GuerillaOntologist One I've gotten increasingly curious about for worker co-ops specifically is the "SEP IRA", which allows a biz to contribute up to 25% of payroll or $50k+ pre-tax. It's often used by solo business-owners, with the "downside" being that if you bring on employees, you have to make equal (salary-prorated) contributions for them and it vests instantly. Not a problem for , obvious, though I'm curious if it's allowable to distribute on the basis of hours worked.

Even if you have to do W-2 income pro-rating, it could still be a powerful tool for worker co-ops to align workers in their trial period with the performance of the co-op if, say, 25% of the surplus was contributed to the SEP each year.

@GuerillaOntologist Could close the "tax efficiency" gap with ESOPs a bit, if designed well... :blobhyperthink:

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