Compare “Free” Fidelity Investments Solo 401k Vs Self-Directed Solo 401k from My Solo 401k Financial

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Here’s a comparison between the Fidelity Investments Solo 401k and the My Solo 401k Financial Solo 401k:

When comparing a Solo 401k from My Solo 401k Financial to a Solo 401k from Fidelity Investments, there are several key differences to consider:

My Solo 401k Financial

  1. Self-Directed Solo 401k with Checkbook & Wire Control:
    • My Solo 401k Financial offers a self-directed Solo 401k plan, allowing you to invest in a wide range of assets, including real estate, private companies, and cryptocurrency.
  2. Compliance and Support:
    • Provides comprehensive compliance support, including the preparation of Form 5500-EZ and 1099-R, as well as ongoing plan updates and amendments.
    • Offers an audit guarantee and handles all necessary IRS reporting at no additional cost.
  3. Contribution Flexibility:
    • Allows for all three types of Solo 401k contributions: pretax, Roth (both employee and employer), and after-tax contributions, enabling strategies like the Mega Backdoor Roth Solo 401k.
  4. Loan Options:
    • Offers Solo 401k loans with a 30-year payback period if the loan is used to purchase a primary residence.
  5. Cost:
    • Charges a one-time set fee of $525 and annual fee of $125, which includes various services like compliance support and document preparation.

Fidelity Investments

  1. Investment Options:
    • Fidelity’s Solo 401k plan primarily allows investments in traditional assets like stocks, mutual funds, and ETFs. It does not offer the same level of flexibility for alternative investments as a self-directed Solo 401k.
  2. No Checkbook Control:
    • Fidelity’s Solo 401k does not provide checkbook control, meaning you cannot directly manage investments like real estate or private loans.
  3. Compliance and Support:
    • Fidelity does not offer the same level of compliance support as My Solo 401k Financial. You may need to handle IRS reporting your own or with the help of your tax professional.
  4. Contribution Types:
    • Fidelity’s Solo 401k plan does not support all types of contributions, such as after-tax contributions for Mega Backdoor Roth strategies.

Summary

  • My Solo 401k Financial is ideal for those seeking a self-directed Solo 401k which allows for all contributions types (e.g., Roth, pre tax and voluntary after-tax), comprehensive compliance support, and the ability to invest in a wide range of assets, including real estate and cryptocurrencies as well as to process solo 401k participant loans.
  • Fidelity Investments is suitable for those who prefer a more traditional Solo 401k focused on stocks, mutual funds, and ETFs, and who do not require Roth or voluntary after-tax solo 401k contributions or extensive compliance support.

Choosing between the two depends on your investment preferences, need for compliance support, and the types of contributions you plan to make.

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