Why a Solo 401k LLC is Not Required and a Bad Idea

Don’t get bamboozled by promoters of Solo 401k LLC. Under this concept, an LLC is created to make all investment purchases on behalf of Solo 401k instead of making investments directly with Solo 401k. Promoters of Solo 401k LLC detail that it is required to protect your Solo 401k from creditors. Well, it’s not. Reason being, Solo 401k is already protected from creditors under ERISA (Employer Retirement Income Security Act of 1974).

Further, congress passed in 2005 legislation that exempts qualified retirement plan (QRP) assets from bankruptcy estates under federal law. Finally, Solo 401k trust documents contain specific language called “anti-alienation language” that further protect it from creditors.

Added Annual Fees

By adding an LLC element for investment purchase purposes to Solo 401k you end up tacking on more annual fees. Each year you will have to file forms and pay an annual tax. For example, in California an LLC is required to file Form 568 and pay an annual tax of $800.

Solo 401k already permits you to purchase alternative investments directly from Solo 401k checking account so adding an LLC to the mix complicates things because it adds an unnecessary extra layer.

Lastly, if you want to shield your personal name from appearing on your Solo 401k investments, this can be easily accomplished when  you Open Solo 401k as you are free to name your Solo 401k trust any name you want. That is, you do not have to use your personal name or your company name, but instead can use a fictitious name.

To learn more about Creditors and Solo 401k read following blog: http://mysolo401k.net/Blog-for-MySolo401k.html?entry=bankruptcy-and-creditors-claims-self

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 >>


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