What is a Self Directed Solo 401k?

Just like all Solo 401k plans, a Self-Directed Solo 401k is approved by the IRS through the issuance of a determination letter. Self-directed Solo 401k is just another name used to refer to a 401k for the self-employed.

However, a Self-Directed Solo 401k is commonly used to describe the function of having checkbook control (Solo 401k Checkbook) over your retirement funds including Solo 401k and, therefore, the choice to direct the Solo 401k into alternative investments such as real estate (Real Estate 401k), Precious metals (Gold Solo 401k), notes, private placements, tax liens, etc.

All other aspects that apply to Solo 401k also apply to self-directed Solo 401k.

Just like Solo 401k, following rules apply to Self-Directed Solo 401k:

  • Is for the self-employed with not full time employees;
  • Maximum annual contributions consist of profit sharing and employer contributions;
  • Maximum contribution is $50,000 for 2012 plus an additional $5,500 ( if you are age 50 or older in 2012) for a total of $55,500;
  • You can contribute to Self–Directed Solo 401k in addition to your full time job 401k, you just cannot exceed the annual $50,000 contribution limit between both plans for 2012, for example;
  • You can borrow-take a loan (Solo 401k Loan) up to 50% of account value not exceed $50,000;
  • You can open self-directed solo 401k with any self-directed Solo 401k provider;
  • Self-Directed Solo 401k has to be adopted in writing (e.g., prototype plan);
  • The business owner serves as trustee of the Self-Directed Solo 401k plan;
  • Annual Form 5500-EZ must be filed each year after account exceeds $250,000 in value;
  • Final 5500-EZ must be filed when you terminate the Self-Directed Solo 401k;
  • As long as you are self-employed with no full-time employees, any business type can adopt self-directed Solo 401k—for example, LLC, Sole Proprietorship, S-Corporation, C-Corporation, LP and Partnership.

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 >>


  • Popular Video

  • ROBS 401k Funding Process

  • Solo 401k Contributions Including Mega

  • Checkbook IRA LLC

  • About MySolo401k

    We help our clients take control of their retirement money. Our products and services provide our clients the freedom to invest their retirement savings in their own business as well as alternative investments such as real estate, private companies, promissory notes, precious metals, tax liens and equities.
    Learn more

    Connect with us

  • We’re here to help.

    Call: 800-489-7571


    8:00 am - 4:00 pm PT

    Why us?