Miscellaneous Self-Directed Solo 401k Questions

Miscellaneous Self-Directed Solo 401k Questions 

1.      Question: I want to know about the Self-Directed IRA and Self-Directed Solo 401k.  What's the difference in price and types of alternative investments that either can hold?

Answer: Both Self-Directed Solo 401k and Self-Directed IRA may be invested in alternative investments such as real estate, tax liens, promissory notes, private placements, precious metals, etc.  As far as administration charges, the Solo 401k is more cost effective of the two because a custodian is not required, and thus you do not pay transaction fees.

2.      Question: Does a trust come only with a Solo 401k?  

Answer: Yes all 401k plans including Solo 401k come with a Trust and IRS letter confirming that                 the Solo 401k plan has been reviewed and approved by the IRS.

3.      Question: Do I already need to be self employed?

Answer: To open Solo 401k, you must be self-employed. For example, if you become self-employed in 2012 you can open Solo 401k by December 31 Solo 401k deadline in order to make Solo 401k contributions for tax year 2012 by your tax return filing deadline plus extension. 

Lastly, not all types of income can be counted towards qualifying for a Solo 401k. For example, passive income generally does not qualify as self-employment income.

4.      Question: What if I might want to look into buying real estate but have not yet?

Answer: Maker sure you understand the Solo 401k prohibited transaction rules before purchasing Solo 401k real estate.  For instance, it’s prohibited to sale or exchange real estate that you personally own to your Solo 401k and vice versa.

5.      Question: Do I treat the self directed solo 401k as a business and write off
expenses?  

Answer: A Solo 401k is a retirement plan not a business. Therefore, Solo 401k is separate from your self-employment business and thus you cannot treat it as a business.

6.      Question: I am very interested in opening Solo 401k checkbook control but I have a lot of concerns.  What does your service provide to the client?

Answer:  Unlike most Solo 401k providers, we provide full service Solo 401k for one flat annual fee. 

Our Solo 401k services include the following:

List of Establishment Documents for Solo 401k Trust:

• ·       Solo 41(k) Adoption Agreement
• ·         Solo 401(k) Trust/Plan Document
• ·         IRS Opinion/Determination Letter
• ·         Beneficiary Designation
• ·         Entity Type Adoption
• ·         Solo 401k Participant Loan Forms
• ·         Transfer/Rollover Forms
• ·         Bank Guide for opening Solo 401k Checking Account at your local bank.

Ongoing Solo 401k Services:

• ·         Facilitation of your investments (optional):
• ·         Participant or Solo 401(k) Loan fees (origination and annual maintenance) (optional):
• ·         IRS Form 5500 preparation (optional):
• NOTE: IRS regulations only require filing of Form 5500 when your account balance reaches $250,000 .
• ·         For all annual distributions, preparation of Form 1099R (optional):
• ·         QDRO review and processing (optional)
• ·         Assistance and ongoing forms for transferring IRAs or other 401ks to your Solo 401k:
• ·         Annual Compliance Testing (optional):
• ·         Investment Forms(optional):
• ·         Assignment of Personal Solo 401k Expert for all future questions and communications.
• ·         Full customer service support including on Saturday