Finding a Good Self-Employed Solo 401k Administrator

As I’ve mentioned in my SEP IRA versus Solo 401(k) comparison, the problem with the additional paperwork involved with a 401(k) is that you have to find an administrator that is willing to do it for you at minimal cost. Compare that with the SEP-IRA, you can usually walk up to many brokers, open up an account, and start trading anything with no annual fees and just commissions.

For example, I opened up my SEP-IRA last year with Vanguard, but I can’t open up a Self-Employed 401(k) with them directly as they won’t be my administrator. The only option I found was to go through a third-party administrator like 401kBrokers, which charges an annual maintenance fee of 0.25% of the account balance. I think the fees are pretty fair considering there is no setup fee or other annual fees, but I still don’t want to pay them if I don’t have to.

The most attractive administrators I’ve found with low fees and a good selection of mutual funds are Fidelity and T. Rowe Price. Both of them will set you up for free and have minimal fees except for the usual fund expenses. (T. Rowe Price does charge an annual $10 administrative fee is charged for each mutual fund account with a balance of less than $5,000.) I am leaning towards Fidelity as they have index funds with 0.10% expense ratios, but they also have $10,000 opening minimums. I have dealt with them for my corporate 401k in the past and their customer service was excellent.

You can find a huge list of Solo 401k brokers here [pdf]. Most of them charge annual fees, which is understandable since they don’t own the funds they need a way to cover their costs.

You can set up a new Solo Roth 401k through 401kBrokers as well, but not through any of the big guns like Fidelity or T. Rowe Price. I’m sure it’s just a matter of time.

Comments

  1. I opened up a Solo 401(k) plan with Fidelity last year. So far they have been excellent… I was pleasantly surprised with their level of knowledge, they gave actual advice from a tax standpoint, not just the standard ‘consult your tax advisor’.

    My corporate structure is S-Corp… total income is around $300k, $60k in salary of which I defer $15k in salary and my company contributes 100%. So I contributed $30k.

    I went to a Fidelity office to set it up, the paperwork was very simple and the folks at the branch knew exactly what I was talking about (which isn’t always that case for stuff like this).

    I am wondering what happens when the plan assets reach over $100k. My understanding is that there is alot more paperwork at that point. I won’t reach it this year unless I roll in some old 401(k)’s from other employers into it.

  2. frugalman says:

    FYI. Looks like your RSS feed is broken.

  3. Hmmm, this just doesn’t make any sense to me.
    I’ve had two different individual 401k accounts and have NEVER had to pay brokerage fees.
    My accounts were with Schwab and with TD Waterhouse.
    In all cases there was no annual paperwork and no extra account or brokerage fee.
    Filling out the paperwork to open the account was a bit more time consuming – but not that much more time consuming – everything was on-line and I didn’t need an accountant to do the work.
    Individual / Solo 401ks were designed to be easy to administer (my brokers do all the work for no extra charge). In the past I had heard of some administrators who charge $100 per year, but that’s not too bad compared to $35 dollar administration fees some corporate 401k providers charge their account holders annually.
    Try schwab and TD waterhouse. I liked them both and they both download into Quicken.
    Have a wonderful day,
    makingourway

    PS I have several posts comparing SEPs to solo 401ks on my blog. As I own both, I’ve become a total fan of solo 401ks due to the ease with which one can contribute money.

    Here’s one discussion comparing the two.

  4. Hello there,

    I am sorry to ask you a wrong question in a wrong place, i am new to to these PF blogs and been learning a lot since 1 week. On your networth statement what is “brokerage” what all will come under this category?
    i don’t know whether i should put this in my networth or not.

    sorry again for asking wrong question…

    thanks in advance.

  5. Some of the bigger brokerages offer Solo 401ks, but most brokerages don’t offer them directly. I looked at Scottrade, Firstrade, ETrade, MB Trading, ThinkOrSwim, TradeKing, Interactive Brokers, and more. To get access, you need another person that acts as your administrator. They are the ones that charge the fees.

    I wasn’t aware that TD Ameritrade did Solo 401ks – I just asked them online and the said they didn’t do any 401ks. Maybe that was only with TD Waterhouse per-merger?

    Charles Schwab has been getting better, but I’ve never really thought of them as low cost. They seem to be the most expensive of all “discount” brokers. Higher stock commisssions, limited no-transaction-fee mutual funds, lack of low-cost index funds.

    Chris – brokerage just means taxable investment account held at a brokerage like TD Ameritrade.

  6. thanks a bunch jonathan!!!

  7. RSS feed should be fixed. No idea what happened…

  8. Lawrence Groves says:

  9. anonymous says:

    T. Rowe Price started offering the Roth Solo 401k as of mid 2006.

  10. you can get a 401k solo thru putnam

  11. Barbara says:

    Hi, all,
    You can set up a solo 401K for free – no mins, no fees at Charles Schwab now (posting 5-9-2007). You do need to have an EIN for your business – even if you are a sole prop – but you can get that online easily. I say: take advantage of socking away a lot more in a solo 401K than you can in a SEP-IRA! If over 50, it’s $20K!

    Barbara

  12. I have a fulltime job (with deferred comp) and a side business that only grosses approx 20k annually. Is a 401k with the brokers listed above even worth it for me? If not, any suggestions?

    Thanks.

    Paul

  13. I have a fulltime job ( maxed out my 401k) and a side business that grosses approx 120K this year but in future I am expecting it to gross about 20k annually.
    Can somebody suggest me the best ways to save on taxes and create a SEP 401k?

    Thanks,
    Jimmy

  14. Be aware that Schwab Individual 401k does not have loans available, so if you find yourself in emergency need of funds, you would need to get them elsewhere (or get hit with penalties for early withdrawal if you touched that solo 401k) and potentially be paying much higher interest than prime.

    Most solo 401k providers do allow loans, so worth taking the time to find one that meets all your potential needs.

    Any providers out there with no setup or annual maintenance fees, no minimum initial investment, AND who allow loans? Or at the very least, low setup and annual fees with no minimum on investment?

    thanks.

  15. We draft all the documents for Vanguard if you want a solo or individual(k). We only charge a flat fee one time fee and nothing else. We are part of Vanguards recommended service providers.

    Thanks

  16. thanks Ron. Who are “we” please?

  17. Alison, you can click on Ron’s name

  18. What do I (1099 sched c) put down the SS4 form to apply for a federal ID number for a solo 401k ?

    Line 1 type of entity – sole proprietor ?

    Line 10 Reason for applying:

    Creating a pension plan ? or Other or what ?

  19. I am in the process of opening a “no-fee” Etrade Individual 401k. I am going to name myself as administrator/trustee of the account. Between my accountant and I think we can handle the Form 5500 that we’ll need to file annually.

    I only PLAN on using the account as a run-of-the-mill retirement fund (publicly traded funds, etc.). However – if I need a loan I believe I could move administration to some person or group with more expertise (E*trade could remain the custodian) and pay the necessary fees at that time.

    To summarize, I think it is possible to avoid adminstrative fees if you keep your retirement investing simple. If anyone sees a problem with my logic, please let me know! Thanks.

  20. Does anyone know if you can do monthly automated deposits for dollar cost averaging for any of the larger plans mentioned above? As I am looking at the Fidelity plan it appears I have to write a check and mail it each time. That sounds like a pain.

  21. Lawrence Groves says:

    The regulations have changed regarding the filing of a tax return. In 2008, you file a Form 5500EZ if your assets are over $250,000. This is an increase over the $100,000.

  22. Lawrence Groves,

    Gotta tell it like I see it. Your posts are shady. You post as though you are a customer and have no relationship. However, on the solo-k site, it shows that Lawrence Groves is the man there.

    If you are going to pump your business, pump it like Ron above, he discloses that he is promoting his business.

  23. KeepItStraight says:

    Lawrence Groves,

    Sorry to say Wood has hit the nail on the head. I was excited to see a reference to something called solo-k.com, but when I saw that your tone of happy customer couldn’t be squared with role of site owner…the jig was up.

    You may offer a great service, but I can’t send you huge sums of money, when you pretend to have forgotten what your day job is.

    In future, just speak in simple sentences. “I offer a service. You may find it useful. Here are the benefits…” Leave the acting to Hollywood stars.

  24. Thanks for the heads up guys. I try to keep self-promotional comments off the blog. Although I must say, he didn’t even have to put down Lawrence Groves as his name, so that’s kind of weird.

    Many of these smaller solo 401k sites are one-man operations. Depending on your view, that could be good or bad. But I like having Fidelity because I feel they are are more tested.

  25. Laqwrence Groves says:

    Woody, Keepitstraight and Jonathan:

    My name was on the comments exactly because I was not trying to hide anything. I do have a solo 401k plan with the Solo-k Retirement Group. Like the President of Hair Club for Men, I am a customer too

    With over 20 years of experience in 401k plan administration, my comments on this blog are intended to be educational not promotional. If I cite the website, it is to provide a source for information on administration that appears to be needed.

    f you reviewed the posts I made, you would see that they provide information valuable to Solo 401k sponsors.

  26. i chose td waterhouse for my self employed 401k due to them have a loan provision and no fees to open and maintain the account.

  27. My small business has an Oppenheimer single k with Roth component through my financial advisor, but I’m wondering if at some point in the future I can roll it over to another fund family — say, T. Rowe Price — and have them administer it to save on fees. Are you allowed to do this — to move single Ks from one fund family to another? Just want to know if I’m trapped forever at Oppenheimer.

    Thanks!

    Stephen

  28. Stephen:
    Changing your investments is not considered a rollover.
    You should be able to change your investments according to your wishes. With a self directed Solo k you should be able to open an account at T.Rowe Price. You might ask them if they will let you keep the Oppenheimer funds should you want to keep them.

    According to Warren Buffet Rule #1: Do Not Lose Money
    Rule # 2: Do not forget Rule #1

  29. Just to clarify something on moving your 401(k) from one vendor to another. You certainly can move from Oppenheimer to T. Rowe, but you must be careful on how you do this. The whole idea for these large institutions to attract your 401(k) business is to provide you with a “free” prototype Plan Document and Trust. By doing this, you are obligated to invest “all” your money with that institution. The Plan Trust in most cases will not allow you to invest in other institutions mutual funds (unless your plan is with a discount brokerage outfit). So if you want your money with T.Rowe as an example, you literally have to fill out a new prototype document (keeping the provisions identical) and then move the entire assets over to the new vendor. In other words you can’t sponsor more then one Plan. The only way to avoid having to open up a new plan and transfer the old is to have your own custom Plan and Trust which allows you to invest your money in any mutual fund company. This way your not using their plan document. Hope that doesn’t confuse everyone.

  30. Ed Sloan says:

    Hello.. I am planning to roll over a 401k to a solo (self employed)type. Have pretty much decided to use Lawrence Groves as a third party administrator, since his plan is pretty simple and allows me to keep the mutual funds I have and get loans as needed etc. Does anyone have any experience with Lawrence and could you share that with me. I am a bit concerned since his company has only been in business for a short time. Do these guys have to be insured or bonded or what exactly is the deal. My account has less than $200k, but it is all I have and I don’t want to turn it over if there is even a remote chance that it is not a good thing. My email is mesaeg@prodigy.net Thanks.

  31. Dave Farmer says:

    I am in the same boat as Ed. I have 401K, IRA, Roth etc with all the big ones, Vanguard, Fidelity and E-trade. I wish to move only $100K into a solo 401k soon since I will be purchasing a house and wish to make use of the $50k loan provision. This is not complicated but I wish the larger companies would offer this, none of them do. Are my only options to use a broker or smaller companies like investsafe, (fees range from .25% to 1% annual)? I don’t have a bias against small companies, only I wish I could determine their reputation beforehand.
    Thanks,

  32. I’m trying to adopt an self-directed (simple) 401k and hit on Etrade – only due to their permitting self-trading shares/options on 6 international exchanges.

    I’m not much of a fan of mutual funds as I cannot see paying someone to manage my investments for a fee when they get paid commission per trade – not per profit. Like the Duke Brothers said in ‘Trading Places’: “Whether the customer makes money or loses it – Duke and Duke get paid on every trade”.

    My only question is – if I elect to start my simple 401k through Etrade – must I select someone else (other than myself) to be the administrator and custodian? From what I read on their site it’s vague.

    As the Administrator I could ‘administer’ my trades – correct?
    As the Custodian – Etrade would hold custody of the assets IN my 401k – correct?

    If either of these assumptions are incorrect – please say so and offer guidance.

    Thanks; Larry

  33. Ed:
    I have had a plan with the Solo-k Retirement Group for a couple of years. They have answered all of the questions I had, kept my plan up-to-date with the IRS, processed my loans and provided the necessary IRS reports for my brokerage, real estate, and gold investments.
    I prefer to make my own investments and the Solo-k Retirement Group flexibility works well for my needs

  34. financeguy says:

    I was troubled by a couple people saying they wanted to take loans from their 401k/solo 401k plans. This is a terrible idea. For one thing your money misses out on growth while its outside your account and even more importantly your volunteering to pay double taxation on the amount you take out as a loan. You have to pay that loan back eventually, and you will with AFTER tax money, that is money that has already had employment and income taxes withheld from it before you can pay back to your 401k. When you go to cash out your 401k upon retirement you’ll pay taxes on all that money again.

  35. Dave Farmer says:

    I truly recognize what Financeguy says – that borrowing from a 401k is probably a dumb idea for most, however in my situation it is either that or try to get a commercial loan 8%+ to expand my business. The 50K is a small percentage (<5%) of my tax deferred holdings, so to me it is not so bad to use the 50K at this stage of life when it can really make or break the business.

    I did eventually find that E*trade offers the loan provision in their solo 401K option and yes once you open the account, you trade ETFs, mutual funds, bonds yourself just like any brokerage account.
    You are the administrator, E*trade is the custodian. I have been happy with E*trade as customer with my other SEP-IRA, IRA and regular accounts.

    This may be off topic, but I remember reading in WSJ last year about a company that will set up an equity plan for your business using your own tax-deferred accounts – thereby allowing you to use your own tax deferred assets in your business. Anyone have any 1st or 2nd hand knowledge of this?

  36. Hey Dave

    Finance guy is a little offbase as far as I’m concerned. It depends on your age and your circumstances, among other things. Just like anything in life there is no set answer for a particular situation. You need to know the details. Meantime, I had The Solo 401K group set up a plan for my small profitable company. I am extremely happy with them so far. They answered all my questions. Prepared the documents ( including the loan documents that I may require) and got an IRS approval and TAX ID # Then I established a brokerage account at Charles Shwab ( money market fund) This allows me to move money in and then decide where I want to invest. I rolled over an amount from another 401k and the whole process was very easy. The Solo Group is the third party administrator and only keeps and forwards records. My wife and I are the trustees. All of this for $292 .00 per year. Pretty hard to beat I think.

  37. I have a small business (bookkeeping) and opened a solo 401k a couple of years ago through 401Kbrokers.com. TD Ameritrade is the custodian. Because of the TPAs increase for small accounts, I want to self-administrate. Is there any reason I can’t/shouldn’t do this? Surely I can figure out the 5500EZ. What do you think?

  38. I have a one person s-corp, and I have a solo 401k with TD Ameritrade, originally opened when it was still TD Waterhouse. I have been doing the EZ5500 by myself the last couple of years, it is really simple if you dont have loans or fancy investments like real-estate within the solo 401K

  39. Izk, thanks for the reply. Nothing fancy here. The atty who wrote my original document for the 401k says I may no longer use it — I have to write my own. Any idea how to go about that? It was a huge document, but with no employees, I don’t see why it has to be that complex. Any suggestions?

    Thanks.

  40. Warbler,

    I have mentioned before that many investment houses will attract your business by giving you a free prototype. You can contact TD Ameritrade and ask if they have a Solo 401(k) Prototype that you can sign on with. Otherwise as I have suggested independent adminisatrative firms can draft a prototype for a nominal fee. You certainly can self-administer your own plan, however there can be some complexities when your dealing with Self-Employment income and how much “Net Earned” income you can use for contributions to the plan. The 5500-EZ is not due until the assets in the plan hit $250,000.
    Hope that helps

  41. I/we have an s-corp. with me and my wife. We are both officers of the s-corp w/o any other employees. I would like a solo 401(k).
    does the ERISA protections work here, I have heard both yes and no!!

  42. I just got off the phone with a TD Ameritrade customer service rep who assured me that they do have solo 401k plans. You can’t open them online, so she is sending me all the paperwork (forms, plan description, etc.) via snail mail. I should have it next week.

  43. Dave Farmer says:

    A follow up. I managed to open up a Etrade solo 401k for my LLC (I am the only employee). There are no fees to do this or annually and the paper work was routine. The thing about Etrade that’s really nice is that I can write myself a loan, $50K max which I needed to do to buy a house. I had rolled my former Keogh into this new solo 401k to fund the loan earlier last year. When I researched this last year, many of the big solo 401k custodians will not provide the loan feature, I don’t know why they dont but Etrade works for me. I also have some other accounts there and was a little worried last year about their long term viability. Caveat Emptor!

  44. I have to re-adopt my solo 401k with TDW due to some new 2010 changes. I would guess this is happening to anyone who opened an earlier version of individual 401k. TDW is suggesting a solo 401k trust for my s-corp to replace my old non-trust 401k.

    I see lots of folks have the solo 401k and s-corp. Is a trust the way it is normally done?

    Some are mentioning trading restrictions with their acct. I have traded stocks and funds in my acct in the past with no apparent restrictions. Should I expect to have further restrictions with a new acct?

  45. All 401(k) plans need to be amended and restated by 4/2010. It sounds like TDW has there own prototype that you can adopt. All 401(k)’s are Trust documents so the accounts are established as a Trust with the custodian.

    Each custodian and funds company issue there own trading restrictions. Shouldn’t have anything to do with a 401(k).

  46. The confusion I had was I thought this trust acct they wanted me to open was some new type of acct. I see now that my old 401k was also a trust. After pestering them further I talked with someone who actually understood it. One change was I had incorporated since my opening the original individual 401k. The re-adoption form allowed me to change the employer info from myself to the s-corp. A new acct is not needed for this, although I understand there could be situations where a new acct made sense, such as incorporating to hire more employees.

  47. WACHOVIA doesn’t carry these plans as of this year.

  48. Interesting discussion. I am looking to establish a self-directed Solo-401k primarily in order to take possession of eligible precious metals and also to take a loan to start a business, which if successful, will repay the loan within 5 years while providing regular income. I understand the tax consequences, if the business does not succeed. My question: Is it legal for my s-corp (me) to possess/store the eligible precious metals afater making like exchange or transfer from an existing PM-IRA? Also, I’m wondering what documents are required from the business started from the loan, if any.

  49. George :
    I recently did the exact same thing with the Solo-k Retirement Group. They set up the plan and trust so I can invest anywhere (legal). I borrowed $50,000 from an IRA I rolled over to the Solo plan and as Trustee of the Solo plan I transferred possession of my American Eagle coins from the IRA to a Safety Deposit box that I am the custodian for.
    Since the loan is a loan to you and you start the business with the proceeds, you just have a prommisory note , pledge and assignment and a repayment schedule. You just make loan payments ( quarterly for 5 years is the repayment option I took)

    Good Luck

    Rich

  50. Thanks, Rich.
    Who decides where the trustee/custodian banking account is held and who opens the account?

  51. George:
    In both cases you do. I opened an checking account at Wachovia and I have a Schwab brokerage account as well
    Rich

  52. One can be his own custodian and administrator for solo 401k with no fees what sowever

  53. If I already made a roth IRA contribution for 2010, does that exclude me from starting a solo 401K roth this year?

  54. Laura Scaramell says:

    Can someone pleases advise me on the following scenario? Can a person that is presently employed but has an old $401k valued at $140,000 roll that money to a UNIK if he starts his own business as a self-employed individual (part-time) while continuing his full-time employment. Can he then take a loan from that to pay down debt? What are the IRS guidelines on this?

  55. Dave Farmer says:

    There is no reason that a person cannot have more than one active retirement plan if the person has more than one job. The IRS guidelines are difficult to comprehend and Dept of Labor rules are also involved. I can only say that I did what you wanted, read my previous posts. You need to make sure you roll the 401k directly into your new 401k solo without touching the money or going thru an IRA. The new 401k solo administrator must allow loans, most of them don’t and your new plan must be written up on the approved forms which most administrators will have. Watch out for companies that charge excessive fees for doing this, the ideal plan will be completely fee free when you are talking about giving them $140K.

  56. Laura Scaramell says:

    Dave, thanks so much for your input! I spent 2 1/2 hours last night trying to research IRS guidelines and websites for Solo 401k’s and yes, you are right, there isvery little out there on this subject. I am wondering if a part-time business such a a large trip for a hunting and fishing guide once a year would be considered self-employed. Only thing I found was that part-time self-employment qualifies. Taking a loan later on past 401k monies to pay down debt. Hoping IRS is O.K with this as the day job as an employee is main source of income.

  57. Dave Taylor says:

    I just reviewed this web site and would like to comment on “free” 401k and Solo 401k plans offered by investment brokerages. When I looked at this option I found (as others have mentioned) that: (1) they want you to invest in their funds or use their brokerage but *may* allow you to invest in funds of other brokerages only if they have a business relationship with them, which usually results in your paying higher processing fees and (2) they require you to purchase non-standard Classes of shares (“D” “E” “F” etc) of their funds and these shares carry with them higher processing fees than the standard class of shares that they sell to comomission-paying customers. Others on this forum may be able to explain this more clearly than I have, but the bottom line is that you are paying for your “free” retirement account in other ways than you would otherwise pay when you invest in those same funds and you are notg allowed to invest in just any outside funds of your choice. In addition, they all appeared to me to also perform the Trustee role, whereas you can function as the Trustee if you use an independent 3rd-party administrator (which I do) and thereby have complete freedom and control to invest in any legal form of investment you wish – even including real estate .

  58. @Dave Taylor – Thanks for the comment. Fidelity’s Solo 401k allows me to buy any individual company stock or ETF that I can buy with their brokerage account. I can also buy individual bonds including US Treasuries. Mutual funds from other companies will cost more, but I think it’s a fair trade-off for the costs. This should fulfill the needs of the majority of investors.

    However, for those with more flexible needs, consider this comment that I just received by email by another reader:

    You can be both your own trustee and administrator.
    Fidelity has non conforming account, which is free. You have to create your own Solo 401k plan, which was created for me for $175 fee, were you appoint yourself as both administrator and trustee. Then you open the account with Fidelity or others in the name on that plan. I plan to toll over all my 401k plans, SEP’s IRA etc in this account and buy real estate and other investments in the name of the plan.

    Its all legal. Only one limitation: no self-dealing.

  59. Bruce Little says:

    I have over $250,000 in assets in a self-employed 401K plan at Fidelity. I have been a client for 10 years. Over the last 6 months customer service has taken a nose dive. They have been unable to process even the most simple back office paperwork, they have failed to properly execute power of attorney documentation submitted on THEIR pro-forma stationery and at a Fidelity branch, they have lied to me, are unable or unwilling to provide effective technical support for Active Trader Pro… and the list goes on and on. Nobody in the “Premium Service Team” has taken any initiative whatsoever to address the several issues with my account. I was previously an advocate for Fidelity but I am now an ADVERSARY looking for a new home for my assets. The staff at my local branch in Houston are completely useless and in my experience treat clients with contempt and a complete lack of integrity… promise to do X and then fail to deliver. A complete nightmare. The “Premium Service” product is a JOKE.

  60. doctor m says:

    Thanks for the blog and the comments. They have helped me a lot. I am currently self employed and I am planning on opening a solo 401K. I have a 401K with my old employer that I plan to roll over to the solo 401K. I work on the medical field and have absolutely no idea on how to invest. Therefore, I would like to find a company that can manage the solo 401K for me properly. I contacted etrade and ameritrade and they both offer management services for a fee (from 0.9% to 0.45% depending on how much money is in the account). I am sure that there are a lot more companies that offer this type of servie and I am open to suggestions. I would like to ask for some advice on which company to choose, based on some kind of ranking, performance, reputation, personal experience, etc. I sure need some guidance and any suggestions are greatly appreciated. Thanks.

  61. Dave Farmer says:

    I’m a big believer in managing your own assets. No one in the world has more of a vested interest in your money than you. However, if you feel you need help, hire a CFP or financial planner at an hourly rate to help you set up and rebalance annually, this will certainly be less in the long run than the percentage planners change you. I have plans with Etrade, Vanguard and Fidelity and they are all OK. Going with the one you feel most comfortable with and with the lowest fee structure is not a bad way to decide.

  62. Lorraine says:

    Re: Funding a new solo 401k plan

    Are funds from either a “rollover IRA”, or an existing “traditional IRA”, or both, eligible to be transferred, directly or via a 60-day rollover, into a NEW solo 401k plan?

    There doesn’t seem to be a hard rule on this. (Or is there?)

    E*trade’s website currently does NOT list assets from “rollover IRAs” or “traditional IRAs” as acceptable sources for funding their Individual 401k product. Another poster previously commented that “You need to make sure you roll the 401k directly into your new 401k solo without touching the money or going thru an IRA.”

    On the other hand, 401kadministrators.com DOES allow the direct transfer of assets from a traditional IRA into a solo 401k plan to be held at Vanguard.

    I would appreciate pointers to other web sources for further research on this question. And TIA for all input!

  63. Looking to start a property management business as a sole proprietor and qualify for a solok plan that I can be the trustee and invest in real estate etc. Can anyone recommend someone who is low cost and does a good job besides lawrence groves. Anyone heard of jvassociates he advertises as solo401kadm.com and charges $250 to set up and $250 annually. Can anyone recommend him or someone else?

    Thanks

  64. Anyone heard of jvassociates or (solo401kadm.com) he charges $250 set up and $250 annual. Anybody heard of him is he legit?

    Thanks
    Rod

  65. I see lots of semi-information and misinformation in the comments.
    The truth is:
    You don’t need all these expensive trustees and middle man with annual fees.
    If tou are qualified as self-employed individual, you can establish Solo-401k plan of your own.
    You can legally act as trustee and administrator.
    I established mine for $150.00 fee 2 years ago, I can give you this gentleman name.
    Once you established the plan, you can open non-prototype account with Fidelity or any other brokerage that has non-protype account capability.
    The account is open in the name of your plan.
    Once it established you have checkbook rights and can invest in ANYTHING. The only restriction is self-dealing. You can’t rent the property you buy from the account, you can/t sell to yourself etc.
    No reporting to IRS until your plan is reached 250k limit.
    I hope this helps.
    Kind Regards,
    Leonid

    • I would like to establish my solo 401k account with minimum fees with no annual fees please give me the
      gentleman name who handled your paper work especially the written plan .

  66. Has anyone used 401kBrokers.com and what was your experience?
    Their website seems excellent.
    Thanks.

  67. Leonid, can you give us the gentleman’s name who set up your solok? Thank You.

  68. Kurt Kumar says:

    Leonid, Jonathan,

    Any way I can contact you and get some feedback. I have expertplan for the last 2 years. But feel the need to be my own trustee and administrator. I would like to understand how were you able to set these up or if you can send me the details of the person then that will be great.

    ~Kurt
    nine-o-nine. 5twotwo. 4seventreetu

  69. Kurt,

    We do this all the time for our clients. Leonid and Jonathan are correct. All you need is a drafted prototype document that is IRS approved and you can open up a Trust account with just about anyone.

  70. “As I’ve mentioned in my SEP IRA versus Solo 401(k) comparison, the problem with the additional paperwork involved with a 401(k) is that you have to find an administrator that is willing to do it for you at minimal cost”

    The whole statement is false in its entirety .
    One can setup Solo401k for 150$ (I did) and to serve as its own Administrator and Treasurer. For 401k under 250k there is no reporting to IRS for over 250k is a single simple form. NO COSTS involved after initial setup PERIOD.

  71. Leonid, can you give out the name and contact number for the gentleman that set up your solok for $150 bucks? Thank You. Do you invest in real estate or other alternatives besides the stock market? I understand you have to have real estate appraised annually when it is in a solok. Any one know about this.?

  72. While I agree that setting up a solo plan should not cost a lot of money, IMHO Leonid is oversimplifying the process and this could be very dangerous. The concept of a solo 401(k) plan is the same as any other company that sponsors a retirement plan for their employees. It requires the sponsor to have a Legal IRS approved document that needs to be administered according to the complex tax laws. Suggesting that $150 would get your everything you need is like giving your child the keys to the car and telling them to drive cross country. Questions you should ask:
    1. Who will calculate the contributions based on IRS limitations. Having Schedule C income or K-1 is not an easy calculation.
    2. Who will be updating the document everytime congress passes new legislation. Any charges for that? It happens every year
    3. Who will be guiding those folks who want to purchase real-estate as an investment in the trust. Anyone concerned with prohibitive transactions or generating UBTI tax?
    4. Who is going to answer other general questions you will surely have?
    I don’t think $150 will get you any of the above.
    Been doing this for 18 years, trust me on this one…..

  73. The contact info for the gentlemen who set up my Solo 401k Plan with me appointed as Administrator and Trustee:

    Bruce E. Fox, Jr.
    FOX&FOX
    7082 N. Maple Ave.
    Suite 104
    Fresno, CA 93720
    559.797.1000 #13
    559.797.1100 (f)

  74. Reply to Ron’s comment,
    From your comments I sense that you are one of the people who overcharge for a relatively simple and repetitive from client to client task.
    I was asked to pay from 1500 to few thousand $$$ for the plan establishment, that would follow by 100s of $$ of yearly fees and multiple fees and delays per transaction.

    Answering your “concerns”:
    1. Who will calculate the contributions based on IRS limitations?
    A: The participants will, this info published by IRS yearly and is no rocket science. Moreover, if one use Turbotax or similar program it will calculate it for you based on the latest IRS rulings and one’s income
    2. Who will be updating the document everytime congress passes new legislation. Any charges for that? It happens every year
    3. Who will be guiding those folks who want to purchase real-estate as an investment in the trust. Anyone concerned with prohibitive transactions or generating UBTI tax?
    A: I think you rather overcomplicated this rather than I oversimplify.
    One buys RE in the name of the Plan. All income and expenses are accurately reflected in the plan’s non-prototype checking account.
    4. Who is going to answer other general
    you will surely have?
    A: I am sure that if I have a general question that is only occasional, FOX&FOX (my plan originator) would be happy to help. If this exceeds occasional questions level, I am sure that with the thousands of dollars that I saved on plan origination, I can afford to fairly compensate FOX&FOX for a consultation.

    “I don’t think $150 will get you any of the above.”
    A:
    Yes it will, because majority of the points you have raised are either occasional self-solving problems or consultation on more complicated issues can be obtained at much more reasonable cost than the ripoff charges that are charged for the mostly boilerplate document.

    I have no financial interest in this issue, I just try to share the information that I have developed with the fellow Solo401k investors.

    I provided contact info for Fox&Fox only upon numerous requests from the blog readers and receive no compensation for such referral. Neither Bruce of Fox&Fox who established my plan for very reasonable compensation, ever solicited any promotion from me.
    Leonid

  75. Thanks Leonid for your help, I will be contacting Bruce and check about setting up my solok. I agree with you that everyone tries to oversimplify and charge excessive fees. Hope all of you educate yourself on this subject so as not to spend more of your money than necessary.
    Rod E

  76. Leonid, accusations won’t get you anywhere. This is a blog, so everyone is entitled to their opinion. I still stand by my points about the importance of paying for expertise especially in such a complex area of the tax law. Buying Real Estate complicates it even more. If you want to take risks (disqualification of your plan) with the amount of money you have in your Solo Plan that’s fine, but I wouldn’t be promoting this as simple to administer on your own. Yes, you should not pay a lot for the actual plan document, but you should engage an expert who can help you adminiter the plan. I’ve been doing this as long as your bud Fox & Fox and I’ve talked to many of folks like you, who are insistent on not paying for anything. Being frugal is good for somethings, but your flirting with disaster if you think you know all the ERISA laws that revolve around these plans. I wonder if Fox & Fox agrees with your assessments? By the way, Turbo Tax gets it wrong every time with Self Employment Income and the IRS limits.

  77. Ron,
    I am not really interested in converting this exchange of information forum into exchange of accusations forum.

    I did not accuse you of anything, except of stating easily dissmissable or vague reasoning for spending thousands of $$$ that are not necessary.

    .. And speaking about accusations: You are the one who accused me of wanting to pay for nothing ” I’ve talked to many of folks like you, who are insistent on not paying for anything.” .. nothing can be further from the truth.

    I have clearly stated in my posting that amount of money I have saved on plan establishment, yearly and transaction fees, will allow me to afford to failrly compensate Fox&Fox for a consaltation, on yearly or otherwise basis. I am sure it will be much more cost effective that the ripoff by many plans I have explored.

    And BTW, your snody remark to “your bud Fox & Fox” is uncalled for. Fox&Fox is not my “bud”. I am their satisied customer. I hope your customers can say the same about you.
    Kind Regards
    Leonid

  78. Leonid, How long have you had your solok in place and what kind of investments have you or are you going to make? Thanks, Rod E.

  79. Ron, can you tell me what your prices are so I can compare to others, Thanks Rod E. I’ve E mailed your company with no response so far. Thanks Ron.

  80. Ron, I was planning on setting up a solok just to be able to roll my existing monies and invest without the nickle and dime custodians I only would be reporting a very small amount as a bookeeper of my passive rental income that I currently receive. Is this a good idea, since I live in California and I understand if I open a self directed ira llc it would cost me $800 bucks a year. Your input would be appreciated, Thanks Rod E.

  81. Vanguard and Fidelity have pretty good programs. They both have a decent plan document that they do no charge. Each company has its own investment structures that you can call them about. I think the only limitation is they do not administer loans and will not administer Real Estate in the plan. If you want to stick with traditional low cost mutual funds or buy stocks and bonds, those two companies are at the top. I would point out that you should still have an expert to guide you, especially on how how much you can contribute etc. For example, you mentioned rental income. If this is not deemed to be “earned income”, you can not use that for calculation purposes of contributing to your plan. Again, this is more of a complex area then some others make it out to be.
    Good luck.

  82. Ron, how does a person qualify to set up a solok? Can you set it up and just start investing and that would be your business of real estate investor?

  83. Rod,
    If you derive self-employment income, U R qualified for Solo401k.
    You need a Plan with IRS approval letter. This is a boilerplate document with such customizations as do you allow loans, etc. I obtained for 150 $$ 2 years ago, it comes with the IRS letter of approval.

    Once you have a plan, you can open a non-prototype account in the name of the plan with any institution that supports this type of accounts.
    TD Ameritrade, Fidelity, etc.
    I opened one with Fidelity, because I had other 401k accounts from former employers, that I rolled into Sol401k.
    There is no costs involved. Fidelity just happy to have you funds without any reporting obligations.

    Your plan should assign you as a custodian and administrator.
    You will receive a check book on this account and can invest in anything you want, including real estate.

    The only limitation is NO SELF-DEALING, which is understandable.
    U can’t rent the property to yourself and can’t live there, or sell it to yourself.

    RE should be purchased in the name of the plan. All proceeds from this investment should go into the plan’s account.

    The only difference with conventional RE purchases is that you should obtain a non-recourse loan. There are co. that specialize in these kinds of the loans. Rates are a bit higher though.

    If you pay cash, no problem.

    I hope this helps.
    Leonid

  84. So in order to qualify for solok what do I need? I’m retired with some rental property passive income as my only income. How would I be able to open a solok plan? Do I have to have some earned income? Could I pay myself some income, just a small amount from my rental income, call myself a bookeeper and put that down on my taxes as earned income and become a sole proprietor to qualify for a solok plan and then roll my retirement monies into that plan and start investing?

  85. Rod,
    I am not an accounting professional, so take my opinion with the grain of salt. However, logically speaking, property management is no different than any other activity that subject to fair compensation.

    Anybody in the know, think I am wrong on that, please chime in.

    I am pretty sure that solo401k can pay you reasonable compensation for the property management services, just like it can pay to a plumber or an accountant.

    This income will be suibject to your personal income taxes.
    Leonid

  86. So let me get this straight. Pay yourself an income from the tax deferred solo401k and declare it as personal income and pay FICA taxes only to put it back into the plan as a contribution?

    Rod, hire a professional who knows what they are talking about and pay a reasonable fee for their expert advice. You are not going to get anywhere asking for advice and technical questions on a free blog. As I have mentioned before, there is a lot more to these types of plans and simply getting an IRS approved document doesn’t get you answers to these complex ERISA matters. I also think you need to figure out your goals. Are you looking for tax deductions? Are you looking to build your retirement nest egg? Are you looking to diversify your retirement assets into non-traditional investments like real-estate? If yes, then these types of plans are a great approach. However, if your retired and have no earned income and don’t plan on having any, you might want to reconsider setting up a solo plan. Also, depending on how old you are, at 70 1/2 you would need to pull out minimum distributions and pay the taxes on that. Just adds to the complexity of administering these plans on your own.

    Good luck.

    Good luck.

  87. Leonid, How did you qualify for your solok, do you have some kind of business that you have earned income? Thanks for your input, Rod

  88. Ron, no I would not pay myself from my solok I would pay myself from my rental income outside of my tax deferred monies. I would just give myself a small amount of earned income on schedule C of my tax return in order to qualify for the solok plan. I am not trying to put more into my tax deferred account, just trying to grow it with real estate and other alternative type investments. Do you set up these type of plans and how much do you charge? Is what I am proposing to do legal or not?

    Thanks, Rod

  89. Ron,
    You are taking my comment out of context.
    I did not recommend doing it, I was just answered a direct question.
    It may make sense to do it, under some circumstances. If you need income from tax sheltered account and is not eligible for a penalty free distribution, etc.
    Otherwise, I agree that it makes no sense.

    Rod,
    I am both W2 employed and have income producing rental properties, with taxable income. Managing my rentals and deriving management compensation qualify me for participation in solo401k, thus, I can roll over some rental income into solo401k deferred account, in parallel with my employer 401k
    Leonid

  90. Leonid,
    So If I decide to set up a solok with Fox & Fox do I need to have some earned income to qualify for the solok? I did talk to Bruce and he thinks that it would be ok to do. What do I call myself a bookeeper, entrepeneur, property manager, what do you call yourself?

  91. Ron,
    Still waiting to hear back from you regarding your pricing if you set up these type plans.

    Thanks, Rod

  92. Rod,
    If you have properties that produce taxable income, you can declare Property Management solo propritership business.
    On schedule C you will list all kind of expenses, including professional services. Write yourself 1099, for the services you provide on behalf of the property (management, accounting etc) and you are a self-employed individual qualified for solo401k.
    Again, I am not a financial professional, so check with Bruce or Rod (if he will ever reveal his fees, (I suspect his services are priceless :-) ).

    Leonid

  93. Rod,

    I think you will be well served by dealing with Bruce Fox.

    Leonid my comrade, I would stick to your day job. This kind of expertise is way above your pay scale.

  94. Hey, Anyone heard of Dave Cole with the Financial Design Group? He was referred to me by Matt Mathews from bigger pockets. He has been sending me educational info about Ira & what he calls the Real Estate K but still haven’t heard how much he charges, but seems to very knowledgeable on the subject.

  95. Ron,
    I am sticking with my day job, this does not preclude me from being informed and sharing my qualified opinion.

    Ron,
    .. I think you are right, reccomending Bruce Fox, he impressed me as a knowlegeble straightforward individual, who has no problem with disclosing his fees and clearly outlining the extent of his service.

    Instead of calling me “comrad” and reccomending me to stick with my day job, this thread and your standing with people who read this this thread would be much better served, if you would point out any error or ommision in my qualified opinion .. this would a useful comment than.
    Kind Regards,
    Leonid

  96. anybody have experience with Broad Financial for setting up Solo401K plans ?

  97. Sam, I only know they are pricey.

  98. Thanks Rod E

  99. Sam, what kind of investments are you considering and do you want to be your own administrator? If you just want to invest in stocks etc. you can open a simple solok at one of the many funds such as fidelity or vanguard or similar.

  100. Anyone know why there is a set up fee and an annual fee? Most want about $ 150.00 to $ 250.00 per year as a maintenance fee of some kind, but if you are your own administrator why would you have to pay an annual fee for?

  101. Sunwest Trust charges $500.00 set up and $150.00 annually I believe.

  102. Leonid, Do you remember does Bruce Fox charge an annual fee? Does anyone know what the annual fee is for?

  103. Rod
    Most companies charge an annual fee to maintain the document as the IRS and Dept of Labor change the regulations and the documents need to be updated for the changes.
    also the plan has to be valued every year so an Asset /Liability and Income /Expense statement needs to be prepared .
    As does a participant statement separating the account by employee vs employer vs rollover monies and pretax deferal vs Roth deferrals.
    Finally, a tax return has to be filed as well (when appropriate)
    To me that’s worth the fee

  104. Thank you for your explanation. I have no employees so would that be the same cost? Do you set up solok plans yourself and what are your fees?

    Thanks,

    Rod

  105. Rod:
    No . I just have my own Solo-k plan with investments are in real estate, gold, and private companies as well as stocks and bonds. I also use the loan feature in my plan so with an account requiring a tax return, the nominal fees I pay are more than offset by the 26% return I received on my investments in 2010 and the 30% tax benefits I get for my contributions

    I would think you would be more interested in investment performance than a small annual fee. Also the tax benefit you get for the contributions to the plan should be a significan interest

  106. Rich, can you give me the info of who you use so I may contact them?

  107. Leonid,

    Does Bruce Fox charge annual fees to do any of the paperwork that Rich is talking about? Or do you do them yourself?

  108. I found a firm that specializes in Solo-k plans and has several years of experience.
    I spoke with several providers and many service providers take the solo plans lightly but there may be issues that may come into play that you would not know about. From the start even how the initial plan adoption resolution is worded all the way to whether your company is setup as a joint venture with your spouse or your spouse is an employee can either benefit you or not
    The Trust agreement can help or hurt your investment opportunities depending on how it is worded.
    Do you know what to do if you have you accounts set up incorrectly, or make a mistake with a contribution or fail to follow one of the obscure Dept of Labor or IRS rules that you were not aware of
    Do you know the procedures invloved in making investments without messing up the tax status of your plan.

    I chose to have professional assistance for a few dollars a year instead of rolling the dice with my accounts and tax benefits. The potential plan disqualification or fines and penalties are not worth the few dollars I save on admin fees.

    If you do not expect to have much in your retirement account then pass on the admin fees. You may be lucky

  109. Rich,

    Well said!

  110. Rich, can you tell me who set up your solok and what their fees are?

  111. Rod E : I like to have the flexibility in investing in any asset class. But primarily in stocks, real estate, and precious metals like physical gold

  112. apologies if this has been discussed already, but has anybody used Solo-K.com folks for setting up Solo 401K’s and whats been the experience like with them

  113. Sam, is that the same one with Lawrence Groves that was talked about in above blog? If it is I know nothing about him except that some of the people on this blog has gone with him and had good results. Pricing is very reasonable as I can see about $250.00 for set up and $250.00 annually.

  114. Rod : I think it could be the same one.. anybody else have any input on them the SoloK.com ( a la Lawrence Groves) ??

  115. Sam, check out 401kadm.com Same price as Lawrence Groves. I spoke to Vern and he seemed very knowledgeable. I haven’t decided which way to go yet as both seem to be alike.

  116. Leonid, How did you find Bruce Fox? Seems like they mostly deal with big companies. What about annual fees etc. Does he need to keep you updated as to any new laws that may change? Most of the people I talked to want at least $250 per year for keeping your solo401k in compliance as the laws may change and need to keep you up to date.

    Thanks,

    Rod

  117. Rod,
    I was looking for a way to get out of paying thousands of $$$ for basically, what is a mostly boilerplate document with limited customization.
    I found a software company, which products generates such document. When inquired about a purchase, the indicated that they do not sell directly to a consumer, but to professionals only.
    I aksed for few names of their customers to solicit a price quote for the plan generation.

    Bruce was far more reasonable and knowledgeable that many other compatriots if his.
    I have ordered the plan, he sent me a questionary and within a week, he generated and mailed me a 3 ring binder with the plan that was customized to my answers. .. This is it.

    I sent a plan to Fidelity and they opened non-prototype account in the name of my plan, with me assigned as administrator and trustee.
    I have a check book rights for my solo401k and don’t have to pay transaction fees to website administrators.
    Truth to be told that one have to take responsibility for acting with the account withing IRS guidelines. You can/t borrow more that 50k.
    You have to repay the loan at the certain percentage etc etc.
    The rules are not complicated but have to be learned and complied with.
    The reward is substantial. You fill informed and in control, and can enter into RE or other investment transaction very quickly if needs to be so.

    I have no contract with Brice for automatic yearly update, but intent to ask his opinion on any changes that might have occurred yearly. I am sure his update fee will not even come close to the fees many shysters in the business will extract from you otherwise.
    I also check IRS site with regards to 401k law update.
    Think about it, other “Administrators” charge you $$$ for establishment if you want customization and yearly fees at least 250 and per transaction fees.

    You can get free plan form Fidelity and others, but the plan is customized to the vendor interests, not yours.
    For example. Fidelity will establish Solo401k for free, but the plan will assign them as administrator and the investment choices will be limited to stocks and mutual funds only, most likely to mutual funds available through them.

    Leonid

  118. Leonid, Thanks for your feedback. So as I understand you opened solok plan with Bruce and then you opened account at fidelity. When you say non-prototype does that mean you can invest in alternative besides stocks? Is that because you have some of your investments with Fidelity besides your real estate? I’m in So. Ca. do you know of anyone like Bruce in my area that would do the same as Bruce?

    Thanks,

    Rod E.

  119. Leonid, Can you E-mail me direct and we can talk. rodneyestle@att.net

    Thanks,

    Rod E.

  120. What does it take to open a checking account for your solo-k trust? I’ve inquired at three national banks in Florida, and each seems to require a state filing of some sort. That is contrary to what I understand.

  121. George, you can check with Dave Coe at Freedom Growth. Just google it and the info is there.

  122. .. Finding reasonably priced Solo 401k administrator .. Hmmm
    .. Wait a momment you already have one .. it YOU.

    Look up past posting on this subject. I described my experience of setting up solo 401k docs for under 200 $$, open non-prototype account with Fidelity .. or any brokerage that allowws non-prototype account (no cost) in the name of your sol 401k. You plan will assign you as Administrator and Trustee. Roll over all your tax sheleterd aphabet soup inv SEp/IRA/401k fro prev employer, etc .. and walla .. you can invest in whatever you want .. the only restricion os no self-dealing. I hope this helps.
    Leonid

  123. Question:I would like to invest in real estate. I have a self-employed 401k at Fidelity. I am the plan administrator and participant. Can I convert to a solo 401k or do I need to terminate plan and set up new solo 401k? I don’t want to run afoul of successor rules. Fidelity is not being very helpful.

  124. Try contacting ( mysolo401k.net) 760-443-1798

  125. Rod, I went to Freedom Growth and found nothing to answer my question.

  126. George:
    If Bank of America, Chase Bank ,Wells Fargo Bank, First Third Bank or Sun Bank will all require a Trust LLC because you are in Florida then perhaps you should open a non prototype 401k brokerage account at one of the discount brokers for your 401k plan. Just make sure that the account will allow you to write checks against the balance.
    Real Estate investors will find great resources at BiggerPockets.com where their are over 50,000 real estate investorsproviding comments and resources

  127. I want to open a solo 401K, but have part time employees (less than 1000 hours each). Do I need a non prototype 401k plan. The mutual fund companies I have checked all would not set up solo 401k for companies with employees.

  128. Would like to invest my Solo401k assets in my own new business (as per perks touted in so many places for the Solo401k). Currently funds are custodian in ETrade, easy to move it all to cash, how do I get ETrade to invest in my business for me? Is this not possible with any of the big houses? What can I do differently. Thank you kindly.

  129. Still looking to open a solo 401k with a low cost or no load mutual fund company that will allow an s corp with part time employees. So far I have no luck in finding one. Any one knows of one. Please post.
    Thanks

  130. Cindy, even with part-time employees, I don’t believe you can establish a solo-401k. It is strictly for incorporated individuals with no employees, only yourself as the only employee and your spouse as a non-employee; hence, the name ‘solo-401k’. You can establish a regular 401k, if you want to allow part-time employees to contribute, or if not, then a SEP-IRA. If I am wrong, I’m sure someone will correct me.

  131. hi there…so lemme get this right. i can only qualify for a solo 401k only if i am providing a service in my business? As of right now i own 3 properties that will simply only yield to me “passive income”. What do you guys think ? is the statement above right or wrong?

  132. Cindy, I am wrong about the part-time employees. As long as each doesn’t work more than 1000 hrs per year, then I believe a non-prototype 401k would work. The employees can’t participate, only yourself and spouse.

  133. Greg Abbott says:

    I’m in theprocess od setting up a solo 401K with Safeguard Financial after looking at all the other options and services out there. These guys seem to be the best at service and the least expensive allowing me to write as many checks as I want from a local account I established at my bank. I am the trustee for the account so I don’t have all the fees associated with a standard SDIRA and as a business owner I have access to the IRA money for almost anything I need including loans of up to 1/2 the account or $50K (whichever is the lesser). Loans must be paid back at (prime+2) min. within 5 years. I can also contribute much more than a standard 401K. There is an initial setup charge of approx. $1800 that cannot be taken out of the IRA but is deductable. However, the only fee is the annual report from the administrator which is less than $100.

  134. Greg,
    I think your $1800 is wasted funds.
    You can write your own checks from any non-prototype account connected to your Plan. The document cost is very reasonable.

    Borrowing against your funds is regulated by IRS. 50k is a limit

    Check my earlier postings to see how it can be done cost effectively

  135. I setup a solo 401k last year for my wife & myself contributing $16,500 each. My accountant is saying that we are limited to $13,000 due to the contribution allocation cannot exceed 25% of your company’s gross income. I thought the single/solo 401k avoided this issue. My single 401k administrator says it does but my acct. refers to IRS tax code. I looked it up and doesn’t really reference the solo/single 401k plans.

    Please if anyone can point me to the right verbiage from IRS or someone who has dealt with this issue with their tax accountant.

    Thanks!!

  136. You need a new Accountant as he is wrong. The 25% does not include the 16,500.

  137. I agree with Ron, the 25% is a limit on profit sharing contributions, NOT salary deferrals. Try this link, especially the last paragraph: http://www.irs.gov/retirement/participant/article/0,,id=151786,00.html

    You are an employee, you take a salary. That company could lose money but that has absolutely no impact on what you can defer as an employee. The ownership aspect is completely seperate from this. Corporate gross income is completely irrelevant.

    I had an accoutant tell me once I was only eligible for a SEP, not a 401k. After talking through it turns out he just wasn’t aware of the 401k options. He is no longer my accountant.

  138. @Ken – Also see this Fidelity link, especially the part where “How a Self-Employed 401(k) contribution can add up” talks about the difference between employEE salary deferral and employER contribution.

    https://www.fidelity.com/retirement/small-business/self-employed-401k

  139. Can someone please weigh in on this? I have a self-employed 401(k) plan with Fidelity. That plan is associated with a single member LLC that I own, and I report my profits on Schedule C of my personal return. The contribution math is very straightforward up to this point. However, I am also a 50% owner of a separate partnership (LLC) that generated a self-employment loss for the year on a K-1. That business does not have a 401(k) plan.

    Should I calculate my profit sharing contribution using: (A) only the profits from the Schedule C business associated with my 401(k) plan, or (B) total combined net self-employment earnings from the two businesses?

    Thanks in advance for your help.

  140. I’m new at this. Has anyone heard of “mysolo401k.net”?

  141. I have been really happy with my retirement plan administrator. Steidle Pension Solutions has handled my plan for two years now. Ever since we set up the PLan, it has run very smoothly and a representative is always available to answer my questions and give great advice. I appreciate using a firm that I know that I can trust.

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