It's unfortunate, but the plain truth is that a lot of the very best retirement strategies just don't get much play by the mainstream media.

Take that little-known Social Security payback provision that recently got closed down. Practically nobody was talking about it until it was no longer available!

Today, the same thing is true of the relatively-new Solo 401(k) retirement plan.

Yet if you're self-employed it can be a terrific way to rapidly build your retirement nest egg.

Heck, even if you only do a little freelancing, it's definitely something you should know about!

But before I explain the ins and outs of this off-the-radar retirement account ...

Let's First Review the Basics Of Traditional 401(k) Plans

The 401(k) is the most common retirement plan now available to America's average worker.

The name comes from section 401(k) of the Internal Revenue Code ... which was added in 1978 by Congress.

What it meant: Starting in 1980, employees could avoid — temporarily — taxation on income they received as deferred compensation.

In other words, the money contributed was not counted for income tax purposes. Instead, it would be taxed — along with investment earnings — upon withdrawal (age 59 ½ or older; other withdrawals subject to immediate taxes and a 10 percent penalty).

I suppose you could say the idea proved popular: Within a few years about 20,000 plans had been established. And today that number is closer to 500,000!

In addition to the tax benefits, many plans also feature employer contributions, which provide a terrific incentive for employee participation.

And even when an employer kicks in some money, the 401(k) plan offers a company far less risk and far more freedom than a defined benefit pension plan.

For 2011, the maximum employee contribution is still $16,500, with another $5,500 catch-up contribution for workers 50 years or older.

I recommend contributing at least enough to get the maximum match from an employer. Even if you park everything in a money market fund, you are earning a risk-free return on your "investment."

And as far as I'm concerned, the more you can put into a 401(k), the better. Period.

This Is Precisely Why the Solo 401(k) Is Even Better Than a Regular Account!

Many of the self-employed have historically used SEP IRAs and Keogh plans to build up their retirements ... while 401(k) plans remained strictly the domain of folks working for others, particularly big companies.

But a few years ago, all that changed when a new type of 401(k) plan — known as the Solo 401(k) became available.

Setting up a Solo 401(k) is extremely easy ... just fill out some basic paperwork!

As the name suggests, it was designed for sole proprietors. In fact, to participate in one, you must work for yourself and have no other employees besides your spouse.

Setting up a Solo 401(k) is relatively easy, and many of the big brokerage houses — including T. Rowe Price, Fidelity, Vanguard, and Charles Schwab — now offer them.

To establish a plan, you simply fill out some paperwork by the end of the calendar year in which you hope to begin contributing. Then, going forward, you make your contributions and manage your own investments. If your account reaches a value beyond $250,000 you must also furnish a report (form 5500) to the IRS annually.

Like regular 401(k) plans, you cannot withdraw the money until you reach 59 ½ ... doing so before that point, will cost you a 10 percent penalty. There are also required minimum distributions starting at age 70 ½.

So far, it doesn't sound all that special, right? Well, not until you talk about contribution limits!

While regular 401(k)s only allow you to put in $16,500, a Solo 401(k) participant can sock away as much as $49,000! (And if you're over 50, you get another $5,500 catch-up provision on top of that.)

Here's how it works.

Like any old regular "employee," you can put away as much as $16,500 of your earnings in a single year.

Plus, as your employer, you can also give yourself something akin to a company "match." In this case, however, the amount you put in is basically a profit share — equal to 25 percent of compensation or 20 percent of net business profit.

The only additional limit is that your combined contributions cannot exceed $49,000 in 2011 ($54,500 if 50 or older). The employee part must be made during the calendar year, while the employer portion can be contributed as late as April 15th of the following year.

And no matter what way you slice it, these generous limits have tremendous advantages.

For example, high earners who opt for the typical tax-deferred version can potentially lop almost $50,000 off their adjusted gross income in one fell swoop!

Worried about tying up so much money so quickly? Borrowing as much as $50,000 or 50 percent of assets, whichever is less, from these plans is perfectly legal. Just note that not all providers have such a provision in their plan documents.

The other restrictions on these loans are that you have to pay yourself back within a five-year period, no less frequently than four times a year, and with "reasonable interest," typically defined as prime rate plus 1 percent.

But all in all, if you happen to be working for yourself right now ... or even doing a little moonlighting on the side ... the Solo 401(k) is very much worth looking into further.

And I recommend doing so before the word really gets out, and tax-hungry politicians find the need to meddle with the currently generous contribution limits!

Editor's Note: If you are not getting a safe and secured 6% to 12% on your IRA or Roth IRA investments, click here.​

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