QUESTION 1: What do we need to get started with setting up a solo 401k? As I stated in my email, the earliest I can do the first roll over will be after 7/12, but I want to have everything ready at that point.
ANSWER: To get started please visit our solo 401k sign-up page and follow the outlined steps. The entire solo 401k setup process is handled on-line.
QUESTION 2: What options do I have for opening the checking account?
ANSWER: The solo 401k checking account can be opened at your local bank. Alternatively, we have the necessary forms to open a checkbook brokerage account at Schwab, TD Ameritrade or Fidelity. The brokerage account usually makes more sense over the bank account route if you are planning to also invest in stocks and mutual funds in addition to taking a solo 401k loan and investing in alternative investments such as real estate, for example.
Visit Fidelity Brokerage account for solo 401k to learn more.
Visit TD Ameritrade Brokerage account for solo 401k to learn more.
Visit Schwab Brokerage account for solo 401k to learn more.
QUESTION 3: How is the account funded originally, since the travel agency does not have any income now?
ANSWER: The Solo 40k can be funded by transferring/rolling over other retirement account funds such as IRAs (SEP, SIMPLE) or qualified plans such as former employer 401k, 403b, TSP, 457b, DBP, to name a few. In addition, additional funding may be made to the solo 401k once you generate earned income from the self-employed business. Visit IRS publication 560 to learn more about earned income from self-employment activity and how it applies to a solo 401k.
QUESTION 4: Since I plan to do the bulk of investing in stocks, we need to open a brokerage account. Does it matter which brokerage we use?
ANSWER: Yes you will need to open a brokerage account in the name of the Solo 401k if you want to process stock trades. See answer to question 2 above and visit listed links to each brokerage account above.
QUESTION 5: Would it be a good idea to open a regular checking account and fund the brokerage account from that one?
ANSWER: While you can open a bank account, and a brokerage account for the solo 401k, it may create more work because you will need to manage two separate accounts. Note however that it will still be deemed on solo 401k plan, just two separate buckets or holding accounts would be created.
Will wait for your response,
PU in Florida