eQRP is Fancy Marketing Term to Refer to a Self-Directed Solo 401k Plan
A QRP stands for Qualified Retirement Plan, and the Solo 401k falls under the qualified retirement plan umbrella designed for businesses with no full-time common-law employees. These plans allow for salary deferrals and discretionary matching and/or profit sharing contributions. We are aware of promoter/company (Total Control Financial) that has coined the eQRP terminology which is another way to refer to a self-employed 401k plan.
Other names used to refer to 401k plans for the self-employed include the following:
- Solo 401(k)
- One-participant k
Whether you refer to a qualified plan for the self-employed as a solo 401k plan, eQRP, Solo-k, etc., the same IRS statutory rules apply.
These IRS statutory rules include the following.
Protection from Creditors:
In order for a 401k or a QRP
to be protected fully protected from creditors, the plan would need to fall under Title I of ERISA
. In order for a plan to fall under Title I of ERISA
the plan would need to have common-law employees (non-business owners) participating in the plan, for example a plan provided by a full-time employer such as the Home Depot.
Whether a plan for the self-employed such as a solo 401k or a QRP is protected from creditors depends on the solo 401k participant’s state of residence not on terminology (eQRP) used to describe a qualified plan. For example, in Colorado, Florida, Texas and Idaho, self-employed plans are afforded full protection from creditors.
For states where creditor protection is not afforded to self-employed plans, a C-corporation or an LLC can be setup. The self-employed plan would then invests in the C-corporation or LLC resulting in the plan being the sole shareholder or member. Passive investments are then placed through the C-corporation or LLC not the self employed plan solo 401k. This results in indirect creditor protection for the self-employed plan since the passive investments (e.g., real estate, notes, metals, tax liens, etc) are placed through the LLC or C-corporation.
Bankruptcy Protection: Resulting from the the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, solo 401k plans are afforded full protection under the federal bankruptcy rules similar to full-time employer qualified plans.