Move SEP IRA to Solo 401(k)

QUESTION 1: Thanks for explaining the Solo 401k contribution details for the solo 401(k) the other day on the phone.

 I am pretty close to opening up a solo 401(k) account and was going through your website and wanted to ask you the question about the Solo 401k EIN.

 "Legal Name of Employer Plan" -  create name and include Solo 401k  immediately after it (for example, Jane Do Solo 401k Trust or Do Solo 401k Trust)

 Is it really important to use ‘Solo 401K’ in the name (any legal requirement)? Why can’t I simple use name as “XYZ Trust”? I believe “Trust” word is required in this case – correct?

ANSWER:  You are correct in that it’s not required to include the words solo 401k in the name of the Solo 401k and that using just the word “Trust” after the name is okay; however, it’s easier to communicate to other parties involved that you have established a solo 401k plan by including the word solo 401k in the name. This will alleviate confusion especially when opening the solo 401k bank account, as the banker may think you are opening a living trust for example.  Also, when transferring existing IRA funds, the IRA custodian releasing the funds may get confused because the solo 401k name portion is not listed. In sum, it is up to the solo 401k trustee to name his or her solo 401k how he or she wishes.

QUESTION 2: The other question: Can I setup employee contribution from my payroll with a direct deposit to the trust solo 401k bank account or do I need to make a contribution with you first and then the money would be transferred to trust bank account? How does this portion works?

ANSWER:  As a solo 401k provider, we don’t take deposits or hold investments; therefore, you can have the payroll company deposit the solo 401k contribution funds directly into the solo 401k bank account or you can make the contribution yourself from your personal or the business account that sponsors the solo 401k.  Either way suffices.

QUESTION 3: I haven’t closed the current SEP IRA plan I have with IRA Services Trust company out of San Carlos, CA,  but at the same time, I haven’t made any contribution for 2013. I plan to close SEP once I have solo 401 k established so if necessary we can move assets in kind. Is this approach okay?

ANSWER:  Yes you can make your self-employed contributions to the solo 401k once you open it instead of the SEP IRA.  Further, when transferring or rolling over SEP IRA assets to a solo 401k plan, the non-liquid assets (e.g., real estate, trust deeds, precious metals (gold), private company shares, etc.) can be transferred/rolled over in-kind to a self-directed solo 401k. Clear instructions requesting an in-kind transfer/direct rollover of real estate and the other assets from the SEP IRA to the Solo 401k will need to be included on the SEP IRA to Solo 401k Transfer forms.

Thanks

Harold from South Carolina