Pick the Right One: Don’t Confuse ALTRUIST Solo 401k with Advanced Solo 401k Setup
Watch: A side-by-side comparison of the Altruist Solo 401k vs. the advanced Solo 401k plan from My Solo 401k Financial—and why it matters for your retirement strategy.
Why This Distinction Matters for Solopreneurs
Not all Solo 401k plans are created equal. Whether you are a solopreneur, a registered investment advisor (RIA), or a financial professional serving self-employed clients, understanding the difference between a basic brokerage-provided Solo 401k plan and an advanced plan can mean the difference between a limited retirement strategy and a fully optimized one.
The same concepts that apply to Altruist also apply to other brokerage-provided Solo 401k plans—including those offered by Fidelity, Schwab, and Vanguard. The underlying issue is always the same: the plan documents dictate what features are available, and brokerage-provided plans are significantly more limited than advanced third-party plan documents.
Solo 401k Eligibility: Two Requirements You Must Meet
Before comparing plan types, it helps to understand the fundamental eligibility rules for any Solo 401k plan. There are exactly two criteria:
Requirement #1: Self-Employment Income
You must be self-employed and able to demonstrate it through your tax filings. The type of earned self-employment income depends on how your business is organized:
Requirement #2: No Non-Owner, Non-Spouse Full-Time W-2 Employees
You cannot have any full-time W-2 employees who are not owners or spouses. However, the following are permitted:
- A spouse working in the business and reporting their own earned self-employment income
- Another co-owner who holds at least a 3% ownership stake and reports their own self-employment income
- 1099 independent contractors (since they are not W-2 employees)
The employee restriction applies across all businesses you or your spouse own. Even if one business has no employees, you may be disqualified if another business you or your spouse own employs full-time W-2 workers.
The Solo 401k Is a Legal Entity—And Documents Are Everything
One of the most critical concepts in Solo 401k planning is understanding that a Solo 401k plan is a legal entity—technically a retirement trust. And like any legal entity, it is the governing documents that determine what it can and cannot do.
When you open a Solo 401k account directly at a brokerage like Altruist, your plan is governed by Altruist’s own plan documents. These omit many advanced features. By contrast, when you establish an advanced Solo 401k through My Solo 401k Financial, you receive custom plan documents that unlock the full range of Solo 401k capabilities—while still allowing you to hold the actual investment accounts at Altruist.
Altruist has created a dedicated account type for clients who bring their own plan documents: the Retirement Trust account. This means advisors and solopreneurs who work with an Altruist-custodied advisor can still benefit from My Solo 401k Financial’s advanced plan features. The plan documents come from My Solo 401k Financial; the accounts live at Altruist.
Side-by-Side Feature Comparison: Altruist Solo 401k vs. Advanced Solo 401k
Here is a direct comparison of what is and is not available depending on which type of Solo 401k plan governs your account:
The Mega Backdoor Roth: A Powerful Strategy That Requires the Right Plan Documents
One of the most impactful features of the advanced Solo 401k plan is the ability to execute the Mega Backdoor Roth strategy. This strategy allows solopreneurs to contribute significantly more to a Roth account than is permitted through traditional Roth IRA limits.
For 2026, the overall Solo 401k contribution limit is $72,000—or $80,000 for those aged 50 and older. Additionally, a special “super catch-up” contribution is available for those aged 60 to 63 as of December 31, 2026.
2026 Solo 401k Contribution Limits at a Glance
The Two Steps of the Mega Backdoor Roth Strategy
The Mega Backdoor Roth strategy involves two distinct steps—and your plan documents must authorize both:
The solopreneur makes a voluntary after-tax contribution to the Solo 401k. This contribution can be up to 100% of self-employment compensation, up to the overall plan limit ($72,000 for 2026). This step does not need to be reported on the personal or business tax return, nor on a W-2.
The after-tax dollars are then moved into the Roth Solo 401k account. Once there, they have the potential for tax-free growth—just like any other Roth contribution. This transfer does need to be reported via Form 1099-R, which My Solo 401k Financial prepares at no additional charge for clients or advisors who request it in a timely fashion.
A basic Altruist Solo 401k plan document does not support either step of the Mega Backdoor Roth strategy. Without a plan document that specifically authorizes voluntary after-tax contributions and the subsequent transfer to Roth, you cannot execute this strategy.
In-Plan Roth Conversions: Moving Pre-Tax Dollars to Roth Status
Another advanced feature available through My Solo 401k Financial’s plan documents—but not through a basic Altruist Solo 401k—is the in-plan Roth conversion (also called an in-plan Roth rollover).
This strategy allows a Solo 401k participant to take existing pre-tax dollars held in their Solo 401k and convert them to Roth status within the same plan. Because dollars are moving from a pre-tax account (where contributions were deducted) to a Roth account (where future growth is tax-free), the converted amount is taxable in the year of conversion—and reportable via Form 1099-R, which My Solo 401k Financial prepares at no additional charge.
After completing an in-plan Roth conversion, customers or their advisors simply submit the relevant information through the form available 24/7 at MySolo401k.net/forms. My Solo 401k Financial then prepares and files the Form 1099-R—at no additional charge—ensuring proper IRS reporting.
SECURE ACT Tax Credits: A Dollar-for-Dollar Reduction in Your Tax Bill
My Solo 401k Financial was the first Solo 401k provider to offer a plan that supports the Mega Backdoor Roth—and also the first to offer a plan that enables solopreneurs to claim the SECURE Act tax credits.
These tax credits are available under the SECURE Act and provide:
- $500 per year for three consecutive years
- A dollar-for-dollar reduction in your federal tax liability (not merely a deduction)
- A total potential credit of $1,500 over three years
A solopreneur who establishes an advanced Solo 401k plan through My Solo 401k Financial in 2025 could claim a $500 tax credit on their 2025, 2026, and 2027 federal tax returns—totaling $1,500 in direct tax savings. Since these are credits and not deductions, they reduce your actual tax bill dollar for dollar. This alone more than covers the cost of the plan over its first SEVEN (7) years.
These tax credits are only available through Solo 401k plan documents that specifically support them. A basic Altruist Solo 401k plan does not qualify.
Form 5500-EZ Compliance: Avoid Costly Penalties
When the total value of a Solo 401k plan exceeds $250,000 as of December 31 of any given year, the IRS requires the plan to file Form 5500-EZ for that plan year. Failure to file carries steep penalties: $250 per day.
My Solo 401k Financial prepares and electronically files Form 5500-EZ for all qualifying customers—at no additional charge. Customers or their advisors simply need to report the total plan value (including all participant accounts, alternative investments, and any defined benefit plan assets).
What to Include in the Plan Value for Form 5500-EZ $250,000 Threshold
How the Altruist + Advanced Solo 401k Setup Works in Practice
For advisors who custody client assets at Altruist, the process of establishing an advanced Solo 401k through My Solo 401k Financial is straightforward:
The plan name consists of three words: the business name followed by the word “Trust.” For example: Sample Wealth Trust. Advisors are encouraged to include their name and email address in the plan name field as a free-form note to ensure they are linked to the application and copied on all future communications.
Whether you work with an Altruist advisor or prefer another custodian, My Solo 401k Financial can provide the advanced plan documents that unlock the full power of your Solo 401k—including the Mega Backdoor Roth, in-plan Roth conversions, alternative investments, SECURE ACT tax credits, and 1099-r & 5500-EZ compliance support.
Next Steps: Get Started Today!
