Update 9/10/2024: Ascensus’ process continues to change – please see the latest below update based on feedback and experience.
If you’re a Vanguard Individual 401(k) account holder whose plan has been transferred to Ascensus, you might be considering moving your Solo 401k plan elsewhere including a self-directed Solo 401k plan provided My Solo 401k Financial which will allow you to take advantage of the services and features of our plan including the following which are automatically included for no additional charge:
- Mega Backdoor Roth
- Solo 401k Participant Loans
- Option to Invest in Alternative Investments including among others:
- Comprehensive Solo 401k Compliance Support:
- Form 5500-EZ preparation and filing via the electronic filing system
- Form 1099-R
- Solo 401k Participant Loan Document Preparation
- Mandatory Plan Updates and Amendments
- $1500 Solo 401k Tax Credits
This guide will walk you through the process of transferring your Solo 401(k) from Ascensus including the necessary steps to complete the transfer paperwork and address common questions and concerns you may have. If you haven’t found a new Solo 401k provider, please get started HERE.
FAQs
QUESTION: I let my Vanguard individual 401(k) move to Ascensus, but I’m frustrated with their limited investment offerings and features. I’m reading that I can’t transfer in-kind and keep getting different answers from Ascensus. I’ve restated the plan using documents from My Solo 401k Financial. What is the procedure to move my account to Fidelity or Schwab where my new accounts will be for my restated plan?
RESPONSE: The procedure for transferring your account is detailed in the section below. Follow the outlined steps to ensure a smooth transition to your new provider.
QUESTION: Can I transfer the investments in my Ascensus Individual 401k account (which was transitioned from Vanguard) to new accounts at Fidelity or Schwab for my restated Solo 401k plan in-kind (i.e. where I don’t sell the investments but the investments simply transfer to the new accounts)?
RESPONSE: You cannot transfer the investments in your account in-kind because Ascensus does not allow it. This means the investments will need to be liquidated (i.e. moved to a cash position) before transferring the funds to a new provider and the funds will transfer by check which will need to be deposited into the new account(s) for the restated plan.
QUESTION: I like certain Vanguard funds. Are there comparable funds at Schwab and Fidelity?
RESPONSE: Both Schwab and Fidelity generally market that they offer funds that are comparable to Vanguard mutual funds.
Below is a list of funds available to Vanguard Individual 401k account holders whose accounts have been transitioned to Ascensus (based on information posted on the public website of Ascensus) with possibly comparable funds at Fidelity and Schwab.
Disclaimer: It’s crucial to conduct your own thorough research before making any investment decisions. Market conditions, fund objectives, and fees can change over time.
Important Considerations:
- Expense Ratios: Compare the expense ratios of funds across different providers. Lower expense ratios generally result in higher returns for investors.
- Investment Objectives: Ensure the fund’s investment objectives align with your financial goals.
- Minimum Investment: Check the minimum investment requirements for each fund.
- Tax Implications: Work with your legal and tax advisor(s) to understand the tax implications of your investment choices.
Data Sources: The information provided in this table is based on publicly available data and is intended for general informational purposes only.
| Funds available to Vanguard Individual 401k Accounts Transitioned to Ascensus | Fidelity Comparable Fund | Schwab Comparable Fund |
|---|---|---|
| Vanguard Target Retirement 2020 Fund (VTWNX) | Fidelity Freedom 2020 Fund (FFFDX) | Schwab Target 2020 Fund (SWCRX) |
| Vanguard Target Retirement 2025 Fund (VTTVX) | Fidelity Freedom 2025 Fund (FFTWX) | Schwab Target 2025 Fund (SWYRX) |
| Vanguard Target Retirement 2030 Fund (VTHRX) | Fidelity Freedom 2030 Fund (FFFEX) | Schwab Target 2030 Fund (SWDRX) |
| Vanguard Target Retirement 2035 Fund (VTTHX) | Fidelity Freedom 2035 Fund (FFTHX) | Schwab Target 2035 Fund (SWJRX) |
| Vanguard Target Retirement 2040 Fund (VFORX) | Fidelity Freedom 2040 Fund (FFFFX) | Schwab Target 2040 Fund (SWERX) |
| Vanguard Target Retirement 2045 Fund (VTIVX) | Fidelity Freedom 2045 Fund (FFFGX) | Schwab Target 2045 Fund (SWNRX) |
| Vanguard Target Retirement 2060 Fund (VTTSX) | Fidelity Freedom 2060 Fund (FFLEX) | Schwab Target 2060 Fund (SWPRX) |
| Vanguard Target Retirement 2065 Fund (VLXVX) | Fidelity Freedom 2065 Fund (FFLDX) | Schwab Target 2065 Fund (SWQRX) |
| Vanguard Target Retirement 2070 Fund (VSVNX) | Fidelity Freedom 2070 Fund (FFLEX) | Schwab Target 2070 Fund (SWTRX) |
| Vanguard Target Retirement Income Fund (VTINX) | Fidelity Freedom Income Fund (FFFAX) | Schwab Target Income Fund (SWLRX) |
| Vanguard Global Wellington Fund (VGWAX) | Fidelity Global Balanced Fund (FGBLX) | Schwab Global Allocation Fund (SWOIX) |
| Vanguard Balanced Index Fund (VBIAX) | Fidelity Balanced Fund (FBALX) | Schwab Balanced Fund (SWOBX) |
| Vanguard Wellington Fund (VWENX) | Fidelity Puritan Fund (FPURX) | Schwab Balanced Fund (SWOBX) |
| Vanguard Growth & Income Fund (VGIAX) | Fidelity Growth & Income Portfolio (FGRIX) | Schwab Core Equity Fund (SWANX) |
| Vanguard 500 Index Fund (VFIAX) | Fidelity 500 Index Fund (FXAIX) | Schwab S&P 500 Index Fund (SWPPX) |
| Vanguard Total Stock Market Index Fund (VTSAX) | Fidelity Total Market Index Fund (FSKAX) | Schwab Total Stock Market Index Fund (SWTSX) |
| Vanguard Dividend Growth Fund (VDIGX) | Fidelity Dividend Growth Fund (FDGFX) | Schwab Dividend Equity Fund (SWDSX) |
| Vanguard Windsor II Fund (VWNAX) | Fidelity Equity-Income Fund (FEQIX) | Schwab Core Equity Fund (SWANX) |
| Vanguard Value Index Fund (VVIAX) | Fidelity Value Fund (FDVLX) | Schwab U.S. Large-Cap Value ETF (SCHV) |
| Vanguard Mid-Cap Index Fund (VIMAX) | Fidelity Mid Cap Index Fund (FSMDX) | Schwab U.S. Mid-Cap ETF (SCHM) |
| Vanguard Extended Market Index Fund (VEXAX) | Fidelity Extended Market Index Fund (FSMAX) | Schwab U.S. Small-Cap ETF (SCHA) |
| Vanguard Strategic Equity Fund (VSEQX) | Fidelity Stock Selector Mid Cap Fund (FSSMX) | Schwab Fundamental U.S. Small Company Index ETF (FNDA) |
| Vanguard Mid-Cap Growth Index Fund (VMGMX) | Fidelity Mid Cap Growth Index Fund (FMDGX) | Schwab U.S. Mid-Cap Growth ETF (SCHG) |
| Vanguard Mid-Cap Growth Fund (VMGRX) | Fidelity Growth Strategies Fund (FDEGX) | Schwab U.S. Mid-Cap Growth ETF (SCHG) |
| Vanguard Mid-Cap Value Index Fund (VMVAX) | Fidelity Mid Cap Value Index Fund (FIMVX) | Schwab U.S. Mid-Cap Value ETF (SCHV) |
| Vanguard Selected Value Fund (VASVX) | Fidelity Value Discovery Fund (FVDFX) | Schwab U.S. Large-Cap Value ETF (SCHV) |
| Vanguard Small-Cap Index Fund (VSMAX) | Fidelity Small Cap Index Fund (FSSNX) | Schwab U.S. Small-Cap ETF (SCHA) |
| Vanguard Strategic Small-Cap Equity Fund (VSTCX) | Fidelity Small Cap Enhanced Index Fund (FCPEX) | Schwab Fundamental U.S. Small Company Index ETF (FNDA) |
| Vanguard Explorer Fund (VEXRX) | Fidelity Small Cap Stock Fund (FSLCX) | Schwab Small-Cap Equity Fund (SWSCX) |
| Vanguard Small-Cap Growth Index Fund (VSGAX) | Fidelity Small Cap Growth Index Fund (FECGX) | Schwab U.S. Small-Cap Growth ETF (SCHA) |
| Vanguard Small-Cap Value Index Fund (VSIAX) | Fidelity Small Cap Value Index Fund (FISVX) | Schwab U.S. Small-Cap Value ETF (SCHA) |
| Vanguard Emerging Markets Stock Index Fund (VEMAX) | Fidelity Emerging Markets Index Fund (FPADX) | Schwab Emerging Markets Equity ETF (SCHE) |
| Vanguard Emerging Markets Select Stock (VMMSX) | Fidelity Emerging Markets Fund (FEMKX) | Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) |
| Vanguard Developed Markets Index Fund (VTMGX) | Fidelity International Index Fund (FSPSX) | Schwab International Index Fund (SWISX) |
| Vanguard Total International Stock Index Fund (VTIAX) | Fidelity Total International Index Fund (FTIHX) | Schwab International Equity ETF (SCHF) |
| Vanguard International Growth Fund (VWILX) | Fidelity International Growth Fund (FIGFX) | Schwab International Growth Fund (SWISX) |
| Vanguard International Value Fund (VTRIX) | Fidelity International Value Fund (FIVFX) | Schwab International Equity ETF (SCHF) |
| Vanguard Global Equity Fund (VHGEX) | Fidelity Global Equity Income Fund (FGILX) | Schwab Global Real Estate Fund (SWASX) |
| Vanguard Real Estate Index Fund (VGSLX) | Fidelity Real Estate Index Fund (FSRNX) | Schwab U.S. REIT ETF (SCHH) |
| Vanguard Core Bond Fund (VCOBX) | Fidelity Total Bond Fund (FTBFX) | Schwab Total Bond Market Fund (SWAGX) |
| Vanguard Total Bond Market Index Fund (VBTLX) | Fidelity U.S. Bond Index Fund (FXNAX) | Schwab U.S. Aggregate Bond ETF (SCHZ) |
| Vanguard Long-Term Investment-Grade Fund (VWETX) | Fidelity Investment Grade Bond Fund (FBNDX) | Schwab Long-Term U.S. Treasury ETF (SCHQ) |
| Vanguard GNMA Fund (VFIJX) | Fidelity GNMA Fund (FGMNX) | Schwab U.S. Aggregate Bond ETF (SCHZ) |
| Vanguard Short-Term Investment-Grade Fund (VFSUX) | Fidelity Short-Term Bond Fund (FSHBX) | Schwab Short-Term Bond Fund (SWSBX) |
| Vanguard High-Yield Corporate Fund (VWEAX) | Fidelity High Income Fund (SPHIX) | Schwab High Yield Bond Fund (SWHYX) |
| Vanguard Emerging Markets Bond Fund (VEGBX) | Fidelity New Markets Income Fund (FNMIX) | Schwab Emerging Markets Bond Fund (SFENX) |
| Vanguard Total International Bond Index Fund (VTABX) | Fidelity Total International Bond Index Fund (FTIBX) | Schwab International Bond ETF (SCHQ) |
| Vanguard Inflation-Protected Securities Fund (VAIPX) | Fidelity Inflation-Protected Bond Index Fund (FIPDX) | Schwab U.S. TIPS ETF (SCHP) |
| Vanguard Cash Reserves Federal Money Market Fund (VMRXX) | Fidelity Government Money Market Fund (SPAXX) | Schwab Value Advantage Money Fund (SWVXX) |
How to Transfer Your Ascensus Individual 401(k)
Background: Navigating Ascensus’ Evolving Process for Solo 401(k) Plan Transfers
The process of transferring your Solo 401(k) plan away from Ascensus has become increasingly complex and frustrating for those who were transitioned from Vanguard’s Individual 401(k) accounts to Ascensus. Initially, Ascensus instructed clients to submit an “In-Service Distribution Form,” as detailed in our previous blog post. However, based on client feedback and experience, Ascensus often rejected this form, creating a major roadblock for account holders looking to move their plans.
Following these issues, Ascensus began telling clients to use a different form, the “Payout Request Form.” Yet, even this form has seen similar rejection rates, leaving many wondering whether this convoluted process is a bug or an intentional feature designed to retain clients transitioned from Vanguard in light of Vanguard’s sale of their Individual 401(k) business to Ascensus.
Current Transfer Procedure
The new process Ascensus requires clients to first terminate the plan on the Employer (Plan Sponsor) site and then submit the transfer instructions on the Employee (Participant) site:
- Terminate the Plan on the Employer/Plan Sponsor Site:
- Log in to the Plan Sponsor Site: www.sponsorinsight.com and at the top in the middle select and complete the following (Note: for Indivudal 401k plans with more than one participant such as two spouses complete for all participants):
- Employee
- Select an Employee
- The following page click on your Name
- Then click Continue straight below
- Next you will need to click on Edit in the lower right
- Then the bottom of the second box set your termination date (i.e. Today’s Date)
- Log in to the Plan Sponsor Site: www.sponsorinsight.com and at the top in the middle select and complete the following (Note: for Indivudal 401k plans with more than one participant such as two spouses complete for all participants):
- Submit Transfer Instructions on the Employee/Participant Site:
- Log in to the Participant Site: https://myaccount.ascensus.com/rplink
- Select “My Account” and choose “Distribution” on the right side.
- From there, select “Termination” and follow the steps to complete a “Direct Rollover” to a “Qualified Retirement Plan” – when completing the transfer instructions, please note the following:
- Financial Institution: Enter the name of your restated Solo 401k Plan (e.g. “Media Street Trust”).
- Note for Fidelity Account Holders: Based on feedback, Fidelity may request that the check be made payable directly to Fidelity as opposed to a check payable to the name of the Solo 401(k) plan. As such and for those clients who decide to open account(s) for the restated plan at Fidelity, it is acceptable to enter “Fidelity” in the Financial Institution field.
- Account Number: Enter the EIN for the Solo 401k (which we obtain as part of the restatement process) which is the best proxy for the account number since the new account(s) for the restated plan will be opened under the name and EIN of the restated Solo 401k at the bank/brokerage of choice.
- Financial Institution: Enter the name of your restated Solo 401k Plan (e.g. “Media Street Trust”).
The process resembles the steps of terminating a plan rather than simply transferring it. While this procedure may seem illogical (as you are not terminating but merely restating the plan), it is technically acceptable for Solo 401(k) purposes due to the following:
- Plan Termination in Ascensus’ Records: The plan is only terminated in Ascensus’ records.
- Restatement to New Plan: Once restated with a new provider, Ascensus no longer controls the official plan records; the Solo 401(k) owner, as the trustee, does.
- IRS Reporting: Ascensus will not report the plan as terminated or the owner as having ended employment to the IRS. They may issue a 1099-R form reporting the transfer, but this is acceptable if reported as non-taxable (Code G in Box 7, indicating a direct rollover).
UPDATE 10/11/2024 Possible Alternative Process
We have received feedback from multiple Ascensus Individual 401k account holders that Ascensus is directing them to use a new Ascensus Deconversion Form to transfer the accounts instead of the termination process described above.
Based on experience and client feedback, one can use either the termination process described above or the new Ascensus Deconversion Form.
If you wish to use the new Ascensus Deconversion Form, please see below:
Click HERE to view the new Ascensus Deconversion Form.
Submit the Ascensus Deconversion Form:
- Note: If there are multiple participants in the Ascensus Individual 401k (e.g. two spouses working in the same business and participating in the same plan), it appears that only one Deconversion Form needs to be submitted but it would be advisable to make note of all of the accounts that are covered by the Deconversion Form in the email transmitting the the Deconversion Form to Ascensus.
- Note: While some clients report that they have submitted the Ascensus Deconversion Form and received a transfer check payable to the restated Solo 401k plan, others report that Ascensus is not willing to make the check payable to the name of the restated Solo 401k and will only make the check payable to the name of the financial institution where the new account(s) will be opened for the restated plan (e.g. Fidelity, Schwab, etc.). From a Solo 401k perspective, it is acceptable for the check to made payable to the name of the financial institution where the new account(s) will be held, it is prudent in this case to confirm that Ascensus will either not report the transfer on a 1099-R or if they will issue a 1099-R will report the transfer as a non-taxable direct rollover (i.e. Code G in Box 7).
Processing Time for Solo 401(k) Transfers
Once you have successfully submitted the necessary paperwork for your Solo 401(k) transfer through Ascensus, the next step is waiting for the check to be generated and sent to you at the address of record. Based on feedback and experience, here’s what to expect in terms of processing times:
-
Check Generation Time:
Ascensus typically takes 2-3 business days to process the request and generate the check. -
Standard Delivery Time:
After the check is generated, it is mailed using standard delivery methods, which typically take 7-10 business days to arrive. -
Expedited Delivery Option:
If you need to expedite the process, you can opt to have the check sent via UPS for a fee of $30. This option will reduce the delivery time to approximately 2-3 business days.
While not required, Ascensus may issue a 1099-R at the beginning of the following year to report this transfer which is acceptable from a solo 401k perspective provided that the 1099-R is issued as a non-taxable direct rollover (Code G in Box 7).
Next Step: Deposit the Transfer Check(s)
Once you receive the transfer check(s) from Ascensus, write the new account number of your new Solo 401(k) account (whether at Fidelity, Schwab, or another financial institution) on the check before depositing it (e.g. sign the back of the check “For Deposit Only (insert account number for new account for restated plan)“). Please deposit each transfer check into the applicable account (e.g. each participant deposits each participant’s check into each participant’s Pre-tax and/or Roth Solo 401k account as applicable).
