QUESTION: Any particular banks in NYC or Westchester that have been used without a problem for setting up the Solo 401k bank account?
ANSWER: While the Solo 401k bank account can be opened at any bank or credit union, we do have clients who have opened their Solo 401k bank account at Wells Fargo Bank branches located in NYC and Westchester NY.
QUESTION: Also can the Solo 401k bank account be opened after the rollover as I’m away from NY until the end of the year?
ANSWER: Yes the Solo 401k establishment rules require that the Solo 401k documents be executed by 12/31 in order to qualify to make Solo 401k contributions by your tax return due date plus extension. Therefore, the Solo 401k brokerage or bank account can be opened next year.
QUESTION: I recall why I was interested in E-Trade versus Schwab/Fidelity/TD Ameritrade. It seemed as though the other 3 brokers did not have a solo 401k Roth offering. Will that matter if I want to do a rollover/conversion later on?
ANSWER: Since we are the Solo 401k provider, our plan document allows for Roth Solo 401k contributions and in-plan Roth 401k conversions. Therefore, whether you decide to use E-Trade Schwab, Fidelity, or TD Ameritrade for the Solo 401k brokerage account with checkbook control, instead of your local bank, you will gain option to open Roth Solo 401k and process Solo 401k in-plan roth conversion.
In sum, any of the brokerage firms mentioned above will only be providing brokerage accounts services for the Solo 401k, not the 401k plan documents, administration support nor the tax reporting. Instead, the last two pieces are handled by you as the Trustee of the Solo 401k Plan with our assistance (i.e., we will file annual Form 5500-EZ once the account value exceeds $250K, and once you commence making distributions at retirement, we will prepare form 1099-R, and we will provide the Solo 401k compliance support). Out of Fidelity, Schwab, TD Ameritrade and E-TRADE, we prefer Fidelity and E-TRADE falls at the end of the list.
QUESTION: Also for a self-directed solo 401k is margining allowed (Reg T margin)? How about performance bonds (futures)?
ANSWER: Yes you can trade futures on margin under our Solo 401k plan; however, UBIT (unrelated business income tax) will apply on margin amount incorporated because margin basically entails borrowing funds from the broker.
Thanks in advance for answering my self-directed solo 401k questions.