Pick the Right One: Don’t Confuse Basic Fidelity Solo 401k with Advanced Solo 401k Setup

Not all Solo 401k plans are created equal — and confusing a basic brokerage plan with a true advanced Solo 401k could cost you tens of thousands of dollars in missed retirement savings opportunities. I

Watch: My Solo 401k Financial breaks down the key differences between a basic Fidelity Solo 401k and an advanced Solo 401k plan.

Full Portability — Open Accounts Wherever You Choose

My Solo 401k Financial is a Solo 401k plan document provider and compliance specialist — not a brokerage or custodian. That means our plan is completely portable. You choose where to hold the assets. Our clients regularly open accounts at:

Fidelity (the most popular brokerage choice), Schwab (the second most popular), hundreds of banks and credit unions for alternative investments or checkbook control, and specialty custodians for cryptocurrency, real estate, or private equity. Having both a bank account and a brokerage account under the same Solo 401k trust is 100% acceptable — and many clients do exactly that. Transferring funds between these accounts is not considered a rollover; it is simply moving money within the trust.

ℹ️ Info: Because My Solo 401k Financial is the plan document provider — not the account custodian — your plan documents and solo 401k compliance support stay with us no matter which bank or brokerage you use. You are never locked into one institution.

Basic Fidelity Solo 401k vs. Advanced Solo 401k — Feature Comparison

The table below highlights the most critical differences between a basic brokerage Solo 401k (such as the one available free at Fidelity) and the advanced plan offered by My Solo 401k Financial.

Feature	Basic Fidelity Solo 401k	Advanced Solo 401k (My Solo 401k Financial)
Mega Backdoor Roth	❌ Not supported	✅ Supported
Voluntary After-Tax Contributions	❌ Not available	✅ Available
Participant Loans (Borrow from Yourself)	❌ Not supported	✅ Supported (up to $50,000 or 50% of balance)
Alternative Investments (Real Estate, Crypto, Private Equity)	❌ Limited to brokerage assets	✅ Permitted
SECURE Act Tax Credit ($500/yr × 3 yrs)	❌ Not Included	✅ Included
IRS Form 5500-EZ Filing Support	❌ Participant’s own responsibility	✅ Included — filed electronically at no extra charge
Roth Solo 401k Contributions	✅ Available	✅ Available
Pre-Tax Solo 401k Contributions	✅ Available	✅ Available
Portability (Open Accounts at Any Bank/Brokerage)	❌ Fidelity only	✅ Any bank, brokerage, or credit union
1099-R Reporting for Mega Backdoor Roth	❌ No dedicated support	✅ Included — no extra fee
Daily Webinars with Top Solo 401k Experts	❌ Not Included	✅ All are Welcome – Free to Join!
Solo 401k Community	❌ Not available	✅ Forums & Library of 100s of Video Webinars

The Mega Backdoor Roth — The Most Powerful Feature You May Be Missing

The Mega Backdoor Roth is a strategy that allows Solo 401k participants to contribute after-tax dollars to their plan and then convert those funds to a Roth Solo 401k or Roth IRA — resulting in tax-free growth and tax-free withdrawals in retirement. My Solo 401k Financial was the first Solo 401k provider to offer a plan that fully supports this strategy.

2026 Mega Backdoor Roth Contribution Limit

For 2026, the overall Solo 401k annual limit is $83,250. Using the Mega Backdoor Roth strategy, a solo participant could potentially have up to $83,250 end up in a Roth account for a single tax year — an extraordinary retirement wealth-building opportunity that is simply not available with a basic Fidelity Solo 401k.

📌 Key Requirement: To use the Mega Backdoor Roth strategy, your plan documents must explicitly permit voluntary after-tax contributions. The basic Fidelity Solo 401k does not support this. You need an advanced plan like the one from My Solo 401k Financial.

Borrow from Yourself — The Solo 401k Participant Loan

One of the most overlooked advantages of an advanced Solo 401k is the ability to take a participant loan. You can literally withdraw funds from your Solo 401k for any purpose — personal or investment — without triggering taxes or early withdrawal penalties, as long as the loan is properly structured.

Participant Loan Terms

Loan Parameter	Details
Maximum Loan Amount	The lesser of 50% of the account balance or $50,000
Interest Rate	Prime rate + 1% OR CD rate + 2%
Repayment Schedule	Monthly or quarterly equal payments of principal and interest
Loan Term	Up to 5 years (or longer if funds used to purchase primary residence)
Documentation	Loan documents prepared by My Solo 401k Financial at no extra charge within 1 business day
Allowed Use of Funds	Any purpose — personal or investment
Tax/Penalty Status	No taxes or early withdrawal penalties if loan terms are met and paid back per the schedule

⚠️ Important: The Solo 401k participant loan feature is not available with a basic Fidelity Solo 401k. If borrowing from your retirement plan is important to your financial strategy, you need an advanced plan that explicitly supports this feature in the plan documents.

SECURE Act Tax Credits — $500/Year for Three Years

The SECURE Act made it possible for solopreneurs to claim a tax credit of up to $500 per year for three consecutive years simply for establishing and maintaining a qualifying retirement plan. This credit is triggered by the inclusion of an auto-enrollment feature in the plan documents — a feature that My Solo 401k Financial builds into every advanced Solo 401k plan.

How the Auto-Enrollment Credit Works

The auto-enrollment feature establishes a default contribution percentage of 3%. However, the Solo 401k participant has the full right to opt out of this default at any time. Importantly, opting out does not eliminate eligibility for the tax credit — the plan document still includes the feature, and you can still contribute in whatever amount you choose, subject to the normal limits and deadlines. The credit applies to both new plans and existing plans upgraded to the advanced My Solo 401k Financial plan documents.

ℹ️ Info: A basic Fidelity Solo 401k does not include the auto-enrollment feature and therefore does not qualify for this SECURE Act tax credit. Over three years, that is up to $1,500 in free tax credits you may be leaving on the table.

IRS Form 5500-EZ Compliance — Don’t Let This Surprise You

One of the most misunderstood aspects of Solo 401k ownership is the IRS filing requirement for Form 5500-EZ. Once the combined value of your Solo 401k plan (including any defined benefit plan) exceeds $250,000, you are required to file Form 5500-EZ with the IRS each year. The penalty for late filing is $250 per day — which can add up shockingly fast.

Who Is Responsible for Filing?

If you have a basic Fidelity Solo 401k, filing Form 5500-EZ is entirely your responsibility. Fidelity does not provide this compliance service. However, with an advanced Solo 401k from My Solo 401k Financial, our team handles the entire process — including electronic filing through the EFAST2 system — at no additional charge. You simply notify us (or your advisor notifies us) once your plan value crosses the $250,000 threshold, and we add you to our filing queue.

How to Upgrade from a Basic Fidelity Solo 401k to an Advanced Plan

If you currently have a basic Solo 401k at Fidelity and want to access the advanced features offered by My Solo 401k Financial, the process is straightforward:

First, submit our online application and make payment to initiate a plan restatement. Our team will draft updated plan documents that restate your existing plan under our advanced Solo 401k plan document framework. Once the restated documents are in place, we help you transfer your existing cash and assets from your old Fidelity account to your new account(s) under the restated plan. You can keep your accounts at Fidelity if you choose — or open accounts at any other bank or brokerage. We leverage our extensive knowledge base to help pre-fill transfer paperwork and guide you through the process efficiently.

📌 Example: A client had an older basic Solo 401k at Fidelity for a side hustle. After emailing My Solo 401k Financial, the team restated the plan under the advanced documents, helped transfer existing assets, and the client now has full access to the Mega Backdoor Roth, participant loans, and alternative investments — all while keeping their solo 401k funds at a Fidelity brokerage account for traditional investments.

True Investment Choice — Beyond the Brokerage Menu

The advanced Solo 401k from My Solo 401k Financial supports a universe of investments far beyond what is available through a basic brokerage plan. In addition to traditional assets like stocks, bonds, and mutual funds available at Fidelity or Schwab, participants in our plan can invest in:

Real estate (rental properties, raw land, fix-and-flip projects), cryptocurrency (Bitcoin, Ethereum, and other digital assets via exchanges that accept retirement accounts), private equity and private placements, tax liens and tax deeds, notes and private lending, and much more. You can even hold both a Fidelity brokerage account for traditional investments and a separate bank account or exchange for alternative assets — all under the same Solo 401k trust.

Getting Started with My Solo 401k Financial — It Only Takes a Minute

Opening an advanced Solo 401k through My Solo 401k Financial is a fast and simple process:

Visit mysolo401k.net, and complete the straightforward online application — just 10 simple questions. Submit the application and complete payment. My Solo 401k Financial prepares your plan documents within the same business day. From there, our team is hands-on in helping you open accounts at your bank or brokerage of choice, transfer any existing retirement funds, and get started making contributions.

Ready to Upgrade to an Advanced Solo 401k?

Don’t leave the Mega Backdoor Roth, participant loans, alternative investments, and SECURE Act tax credits on the table. My Solo 401k Financial makes it simple to get the plan documents you need — with full ongoing compliance support included.

Next Steps:
🚀 Open Your Advanced Solo 401k Account Today

Remember: This information is provided for educational purposes only. Always consult with qualified tax, legal, and investment professionals before making decisions with your retirement funds.