Convert conventional 401k to a Solo 401k | Change Self-Directed 401k Providers

BACKGROUND: Greetings – I have a small company with just my wife and me as employees. I created a solo 401k through Sunwest Trust; however, they did not offer me the level of help I needed to maintain the account. I need a little hand holding at first since this is my first self-directed 401k.

I moved the solo 401k to ADP because I thought it would be easy since they do my payroll and tax withholding, however I am not particularly happy with their service either. For one thing, they converted my solo 401 to a conventional 401k and they are charging me $128/month to maintain the 401k for just two people! I do not particularly like the mutual funds offerings they provide either.

So my questions for you are:

QUESTION 1) Can you convert my conventional 401k back to a solo 401k? Frankly I have no idea what the difference is, other than a solo k is designed for small 2-person companies, so perhaps you can explain that to me as well.

ANSWER: Referred to as changing solo 401k providers, yes we can assist you. This is referred to as restating the solo 401k plan because the plan is not closing down per se since you are still self-employed but simply changing from your current solo 401k provider to us. Your current solo 401k provider’s solo 401k plan document does not allow you to invest in investments outside equities. By switching to our company, our solo 401k plan will afford you the option to invest in not only mutual funds and stocks but also alternative investments such as real estate, precious metals, tax liens, private placements, promissory notes and any other investment not prohibited under the code. You will also gain the option to take a solo 401k participant loan.

QUESTION 2) At tax time do you prepare documentation that I can take to my CPA in regards to the 401k since I have no idea what is required at tax time.

ANSWER: Yes we will work with your CPA in ensuring all applicable reporting with respect to the solo 401k is maintained. Reporting such as deducting the annual contribution, filing the annual Form 5500 EZ, which only applies once the total value of the Solo 401k exceeds $250,000, and reporting any in-plan Roth conversions or distributions.  Please visit our solo 401k pricing page for a list of the services that we provide.

QUESTION 3) How would I integrate a solo 401k that you maintain with my payroll at ADP?

: Since the solo 401k bank account would be opened at your local bank, or a brokerage account opened for the solo 401k at Fidelity or TD Ameritrade, for example, you can direct ADP to make the contributions directly to the new solo 401k account.

Thanks in advance for your help. You were recommended to me by Skane Tax Solutions

Larry O. in CA

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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