staff Solo 401k plan participants often need more tax advice and documentation from their plan provider. It is crucial to work with a team of ERISA and tax professionals who specialize in the unique features of a Solo 401k.
The best Solo 401k providers are those that offer premium self-directed plans. Users of these plans can invest in non-traditional assets such as precious metals, private debt and equity, real estate, and early-stage startup capital.
Cost
The solo 401k plan is among the finest options for retirement savings if you own a small business or are a sole entrepreneur without workers. It offers higher contribution limits than a regular IRA or SEP IRA, plus perks like Roth contributions and loan rules. But setting up a solo 401k is a bit more complex than opening an IRA, and choosing a provider with good account setup support and administration help for keeping your solo 401k in compliance is essential.
The best solo 401k providers will have an easy process for rolling over funds from an existing 401k, IRA, or other retirement account. They’ll also be well-versed in the required paperwork. They can work with your bank, credit union, or brokerage firm to ensure a smooth transition without delays or missed investment opportunities.
Some providers offer checkbook control for your solo 401k account, meaning you can write checks directly from your account to invest in other assets or pay bills. It can be helpful if you want more flexibility with your investments and have the option to invest in alternative assets like real estate, private equity, or cryptocurrency.
Another service to look for is a provider that allows you to roll over funds from an old employer’s 401k or traditional IRA, which can significantly increase your investment options and give you access to tax benefits you might not have had otherwise. A good provider will be willing to explain how long the process takes, including the time it may take for your new account to receive funds from your former employer’s plan.
Finally, an excellent solo 401k provider will have a high audit success rate and be willing to stand behind their work with you should the IRS ever examine your account. It is crucial if you’re using a self-directed solo 401k where you are investing your own money or taking on greater risk with your investments. A provider that needs to gain the experience or expertise to advise you or protect your interests adequately can lead to penalties and losses.
Investment Options
Whether you’re looking for a traditional or self-directed solo 401k, you’ll want to choose a plan provider with robust investment options and a solid customer service track record. Some top-rated providers offer various investment options, while others specialize in more niche assets.
If you’re interested in alternative investments, like real estate, startups, or precious metals, consider using a self-directed solo 401k provider. These plans give checkbook control of your account so you can invest in assets that aren’t traditionally available inside a 401k.
Most top-rated solo 401k providers offer a wide variety of investment options. If you’re looking for a more comprehensive selection, consider choosing a provider specializing in alternative assets. They’ll have a more limited offering of traditional assets, but they will be able to provide you with the flexibility you need to manage your retirement savings.
Fees
Choosing which solo 401k provider to work with will significantly impact your total fees. You will seek a low-cost plan provider with many investment options and features.
It’s important to consider selecting a provider with ample experience rolling over your retirement accounts, such as 401(k)s and IRAs. A good provider will help you navigate the process seamlessly, avoiding unnecessary taxes and penalties. They will also be well-versed in the IRS requirements for the rollover and establishment of a new solo 401k.
Be wary of providers that aren’t well-versed in the IRS requirements for a solo 401k, offer discounts to encourage you to sign up (but will not be there to assist you with future compliance questions or reporting), have a poor Better Business Bureau rating or don’t have an informational website on 401(k)s.
Another thing to remember is that when selecting a solo 401k provider, you will need to consider how much you plan on contributing each year. Some providers allow you to vary the amount you contribute each year between your pre-tax/traditional bucket and your after-tax Roth bucket based on your current needs, tax deductions, and future outlook. Others limit you to a fixed contribution per year.
In addition to the costs associated with opening and maintaining your account, you will need to consider any additional charges that may be applicable. For example, some solo 401k providers will charge a flat fee to open an account, while others will charge for each transaction or asset purchased within the account. Some of these fees may be refundable, so check the provider’s terms and conditions before proceeding with your plan.
Additional Services
The right solo 401k provider will offer more than just account management and investment options. They will also offer plan setup and administration support for the trust holding your 401k funds. It is crucial since a solo 401k is more complex to set up than an IRA or SEP IRA and can involve the opening of separation and brokerage accounts for your 401k trust.
In addition, many providers will also provide education and support on retirement investing. It is crucial because retirement investing requires a longer time horizon and patience, unlike day trading. It’s important to have education and ongoing support as you build your portfolio.
The best solo 401k providers will also offer Roth 401k plans. These are excellent options to avoid RMDs (Required Minimum Distributions) at age 70 1/2.
