Beginning a Solo 401k — Experiences and Recommendation

HomeStretch wrote: ↑Sat Sep 07, 2024 8:38 pm

Hot Sauce wrote: ↑Sat Sep 07, 2024 6:13 pm
—What else ought to I find out about establishing and sustaining such a plan?

1. You’re the plan administrator. Don’t anticipate tax and different recommendation from the plan supplier. In the event that they do present recommendation, doublecheck its accuracy.

I feel that is true normally for all accounts, however it’s very true for solo 401k’s: don’t belief what customer support reps inform you in terms of 401k-specific particulars. Suppliers can and have given incorrect info, in line with boglehead posts. I do not know if we have ever seen a case of somebody truly getting hit with a penalty for following their recommendation, however in some methods that may be scarier, as a result of no person tells in case you in case you screwed up. The late charges for 5500-EZ do truly occur, although, you actually need to not overlook about that one. Some suppliers gives you reminders, however you should not depend on it.

Observe that in case you go searching round on bogleheads for information, even some individuals on right here have carried out issues clearly in opposition to the foundations with out realizing it (a number of plans for a similar firm, making an attempt to make use of a number of suppliers for a plan, and so on). Do not assume that one thing is okay simply because individuals did it right here.

Virtually talking, you do not actually need to fret about the entire particulars in case you hold issues fairly easy: simply do regular employer/worker contributions throughout the limits, and do not withdraw something till you hit retirement age. No loans, no early withdrawals, no in-service rollovers, stick with the identical supplier the entire time, and issues keep quite simple.

My least favourite half is transferring to a brand new supplier. I might counsel making an attempt to keep away from that, however it may be required in case your supplier will get purchased out or sells the solo 401k enterprise, or simply stops supporting that sort of account. That looks as if it should not occur fairly often, nevertheless it’s occurred to me twice! Attempt to choose a supplier you suppose will not kick you out. My greatest guess proper now can be Constancy, however clearly I am not good at choosing these.

Yet one more bit of information I see individuals get confused by:

The “plan” is one thing that exists outdoors of the accounts you open at no matter supplier. That’s, you management the “Sizzling Sauce Solo 401k Plan”, because the employer. Although you are utilizing Constancy’s prototype plan (or Schwab’s, or a plan that mysolo401k offers you), and that dictates the wonderful print particulars of what the plan permits, you’re the one which decides that the “Sizzling Sauce Solo 401k Plan” is utilizing that supplier’s plan paperwork. Conceptually it’s extremely completely different from a standard brokerage or IRA account, nevertheless it seems similar to a kind of accounts in case you simply sort of ignore all the foundations (which lots of people do!).