QUESTION
1: I set-up my business as an
LLC. Could the Solo 401k be set-up under the LLC or must I set it up as
an individual under my SSI?
ANSWER:
In order to open a solo 401k, you must be self-employed with no full-time
employees; these are the two main IRS requirements. Further, the solo 401k is
sponsored by the self-employed business, regardless of entity type (i.e., it
can be a sole proprietor, LLC, partnership or corporation). As such the LLC would be the one sponsoring
the Solo 401k. Keep in-mind that the
new EIN number would need to be established for the Solo 401k.
QUESTION
2: How is recordkeeping for the solo 401k loan repayment handled?
I assume the payments are made to the Fidelity Account, so as Trustee do I need
to log the payments?
ANSWER:
As the trustee of the Solo 401k plan, you, not Fidelity, will be responsible
for following the solo 401k loan payment schedule that we prepare and thus
making sure the loan payments are made timely. Keep in-mind that Fidelity’s
only role with the self-directed solo 401k is to provide a non-prototype brokerage
account. They are not the trustee, fiduciary or administrator of the Solo 401k
plan.
QUESTION
3: I have an old solo 401k with
Expert Plan that I am considering transferring; however there is small loan
outstanding on it. Can I transfer the loan with the other assets to the
new solo 401k plan?
ANSWER:
You will need to check with your current
solo 401k provider as most of the
time you have the option to either pay off the outstanding solo 401k loan or
take it as a taxable distribution, especially if the solo 401k loan is in
default.
Thanks for your help.
John L. from Maryland
No comments:
Post a Comment