Fidelity Solo 401k Brokerage Account from My Solo 401k Financial

A Fidelity Investments Solo 401k brokerage account with checkbook control from My Solo 401k Financial is ideal for those looking to still have the option to invest in equities while also gaining checkbook control over their retirement funds for investing in alternative investments such as real estate, notes, tax liens, and private shares  in addition to processing a solo 401k participant loan.

 

A Fidelity Investments Solo 401k with checkbook control allows for the following

Checkbook

Fund Solo 401k alternative investment purchases, e.g., real estate, precious metals, tax liens, promissory notes, private placements, etc. by writing checks from the Solo 401k Fidelity brokerage account.

Solo 401k Loan

After we prepare Solo 401k loan documents, process Solo 401k loan directly from the Solo 401k plan Fidelity brokerage account.

Brokerage

Continue to trade equities and grow your retirement funds tax-deferred, deposit investment gains from your Solo 401k’s alternative investment holdings (e.g., rent check proceeds from real estate) directly into your Solo 401k Fidelity brokerage account, and make your annual Solo 401k contributions directly into the brokerage account.

Flow of Funds

  • Wire out – Requires Fidelity’s wire form directive which we can prepare for your submission to Fidelity’s local branch.
  • Wire in – Click here to see special instructions for brokerage accounts.
  • ACH out – Not currently enabled by Fidelity.
  • ACH in – Click here to see special instructions. You can make your Solo 401k annual contribution into the Fidelity non-prototype account via ACH or by physical check. ACH transfers are setup on your bank side.
  • Check-writing is enabled – Fidelity will send a checkbook for each account within 10 business days.

How it works

Fidelity is simply providing brokerage account for your Solo 401k, and My Solo 401k Financial is your Solo 401k provider. In other words, even though Fidelity also offers Solo 401k, their Solo 401k plan document restricts you to only investing in stocks and mutual funds; however, by using our Solo 401k document, which allows you to serve as trustee of the Solo 401k and invest in alternative investments such as real estate, precious metals, tax liens, promissory notes, private stock, etc., as well as process Solo 401k Loan, Fidelity is not involved in the administration of the Solo 401k.

Documents for Opening Fidelity Solo 401k Brokerage Account

To open Fidelity Solo 401k with checkbook control, you will need to submit My Solo 401k Financial Solo 401k plan documents, which we prepare in 24 hours, along with Fidelity’s special brokerage account forms and checkbook paperwork, which My Solo 401k Financial will fill out for you.

Fees Charged by Fidelity Investments

Because Fidelity is simply holding the funds in a brokerage account under the solo 401k offered by My Solo 401k Financial, the only fees that apply to the Fidelity brokerage account are:

Stock trading fees of $4.95 per trade; and

outgoing wire fees of $15.00 per wire.

ROTH IRA Statement from Fidelity Representative: QUESTION:

Can you confirm whether this statement is true or not (from a Fidelity  representative). The IRS does not allow for Roth IRA money to be rolled into any 401k plan. That is only allowed on pre-tax IRA and retirement accounts. I was hoping to roll over a Roth IRA into my solo 401k roth account. Is this allowed?

The Fidelity representative is correct that a Roth IRA cannot be transferred to a Roth solo 401k. This is a Roth IRA rule. Visit here for more on this rule. I suspect this rule was put in place because the distribution rules are different for a Roth IRA vs a Roth solo 401k.

Processing Solo 401k Loan QUESTION:

I received the rollover check from John Hancock for my former employer 401k and will go into the local Fidelity Investments office tomorrow to deposit the check into the new brokerage account that you helped me setup for the self-directed solo 401k that you provide.  I would like to make sure I understand the process to create a solo 401k participant loan against the balance.  I think you all create the paperwork.  What’s the method to move the loan amount from the fidelity account into my personal checking account.  Do I just use the fidelity transfer functionality, get a check drafted or ?

Also, I will be rolling over an IRA account as well.  Am I limited to 1 loan or can I take out a second loan against the additional amount?

ANSWER:

We will prepare the solo 401k participant loan documents (not Fidelity Investments) since we are the solo 401k provider. We prepare the solo 401k loan documents in 24 hours. Click here for what we need to prepare the solo 401k loan documents. Once the transfer check has cleared, you can process the solo 401k loan by check (one you receive the checkbook in the mail for the new self-directed solo 401k that you opened with us), our you can process the solo 4o1k loan proceeds by using the Fidelity wire form to request funds be wired from your Solo 401k to your personal bank account for the Solo 401k Participant Loan.

Rollover Existing Fidelity Solo 401k/KEOGH/PSP: QUESTION:

Can I rollover the current equity investments held in my current solo 401k through Fidelity into as self-directed solo 401k with checkbook control for taking a 401k participant loan and for investing in alternative investments such as real estate, notes, liens, and metals, for example? In other words, my new self-directed solo 401k would invest in the same Fidelity mutual funds initially before investing in real estate? I presume Fidelity Investments would simply re-title my current investments.

Yes your existing solo 401k with Fidelity Investments would get restated to our solo 401k plan which allows for 401k participant loans and investing in alternative investments such as real estate.  We would then fill out new Fidelity brokerage account forms so that Fidelity can open a new brokerage account for the self-directed solo 401k that we offer. Note that Fidelity will not simply re-title the existing account.  They require new brokerage forms. Subsequently, we would prepare an internal Fidelity transfer form to have Fidelity internally transfer the existing solo 401k equity holdings and cash to the new brokerage account for the self-directed solo 401k. You will then receive a checkbook in the mail from Fidelity for the new solo 401k for placing your alternative investments, and/or you can process the investments via wire.

Placing Real Estate Investment QUESTION:

I think I'm all set now with the Fidelity brokerage account for the self-directed solo 401k that you guys helped me to open. I deposited my rollover check with no issues at the local branch. I also signed up for check writing and have received my checks in the mail yesterday. I s there anything I would need to do before I just write a check for an investment- for example, to invest in a real estate deal?

That is good news, and it sounds like the Fidelity brokerage account setup up process went smoothly and now you can start placing investments in alternative investments such as real estate. You can either place the investments by writing a check or by filling out the Fidelity outgoing wire directive, which we can fill out for you. Click here for more information regarding investing in real estate.

Direct Rollover Check Question:

I received my direct rollover check from T. Rowe Price. Should I send the rollover check to you or directly to Fidelity once the Fidelity brokerage account for my self-directed solo 401k account has been opened?

Answer:

Since you have received your transfer check from T. Rowe Price, the next step is to deposit your transfer check into the Fidelity Non-Prototype account for the self-directed solo 401k.
Below are the steps to do so:

Process Alternative Investment by WIRE Question:

Also, is it possible to move (i.e. wire) funds directly out of my Fidelity brokerage account under the solo 401k electronically  for investments in alternative investments like real estate and notes?

Answer:

Yes, because we are the solo 401k plan provider and provide the compliance support, the Fidelity non-prototype retirement brokerage account allows for outing wires (not outgoing ACH). To initial the outgoing wire, a specific Fidelity wire directive form is required which we can prepare for your submission to the local Fidelity branch. Lastly, whiled Fidelity does not allow for outbound ACH outbound, inbound ACH is possible. This could come in handy for setting up the return of income from solo 401k alternative investments like real estate investments as well as note investments, for example.

Deposit the check at Fidelity

Please write the Fidelity account number for your account that starts with the letter “Z” in the memo section of the check.
Please then take the check to your local Fidelity branch. You can find the nearest Fidelity branch using Fidelity’s online branch locator: http://www.fidelity.com/branchlocator/
Alternatively, you can mail the check to Fidelity Investments:Fidelity Investments 100 Crosby Parkway, Covington, KY 41015
If applicable, these will be the same instructions you will follow when you receive your transfer checks from other companies.
Send Direct-Rollover Check to Me or Fidelity Investments QUESTION:
 Do I want the direct-rollover check from my former employer 4011k plan held at Principal sent to me or directly to Fidelity for deposit into my self-directed solo 4o1k brokerage account?

Answer:

It is recommended that the directed-rollover check that is made payable in the name of the self-directed solo 401k for your benefit is mailed to you as the participant to avoid it getting lost at Fidelity while the brokerage account (non-prototype brokerage account) is being established. When you receive the check, make sure the check was made payable i the name of the solo 401k plan. When the non-prototype brokerage account has been opened with Fidelity, write the new Fidelity “Z ” account number for the self-directed solo 401k on the memo section or back of the rollover check and deposit it at your local Fidelity branch.

Roth 401k and After-Tax QUESTION:

Now that I have opened my solo 401k with you guys (see attached signed forms), I would like to proceed with the Fidelity brokerage account with the checkbook control option. I will be making ROTH employer contributions and AFTER TAX contributions only. Is this okay?

Correct that you are not required to make pre-tax solo 401k contributions but may do so at a later date.

We will provide two sets of Fidelity brokerage account forms tomorrow-one set for the Roth 401(k) funds in the second set for the after-tax 401k funds. Both brokerage accounts can be opened with a zero balance.

Also, once you fund the after-tax brokerage account, please let us know and we will email you the in-plan conversion procedure so that we can document the in-plan conversion of after-tax solo 4o1k funds to the Roth solo 401k and issue the required Form 1099-R to report the non-taxable conversion, so please make note of this.

 

Submit Solo 401k Contribution QUESTION:

Can I submit my solo 401k contributions to Fidelity Investments by check or by wire transfer?

Once the Fidelity brokerage accounts have been opened, you can make the solo 401k contributions by check by going to your local Fidelity branch or by ACH or by wire. See the following. 

In sum either method is allowed since the funds will flow directly into the solo 401k brokerage account.
 

 

Convert Existing Fidelity Solo 401k and Take a 401k Participant Loan QUESTION:

I was looking for a 401k alternative to Fidelity and stumbled on your site and wanted to send an email with a few questions.

I am in the process of buying a new house and was hoping to take a loan out from my solo / self employed 401k plan at fidelity; however to my surprise they said that my 401k plan doesn’t have the loan feature because it is a self employed / small  business type.
Needless to say I am looking for a new  401k provider where I can transfer my and my wife’s 401k monies from fidelity and shortly after take a loan for the down payment. Does this sound like something you folks would be able to help me with? If this sounds doable, please give me a call when you have some time to go over next steps.

ANSWER:

Your situation is quite common among our clients as we have many clients who have converted from a Solo 401k at Fidelity  (i.e. restatement) so that you can take a solo 401k participant loan.  Please note that we will prepare the required loan documents as part of our services for no additional charge.  Moreover, if you will use the loan  proceeds to purchase your primary residence the term of the loan can be as long as the term of your mortgage (e.g. 30 years).
Once we prepare the solo 401k loan documents and you process the loan proceeds from the new Fidelity brokerage account, below are the options for making participant loan payments from you personal bank account into the Fidelity brokerage account:
Making Solo 401k Loan Payments: Method 1) Loan payments can be made by check payable in the name of the solo 401k trust and deposited at your local Fidelity branch.  Make sure to write  “Participant Loan Payment” on the  memo section of the check.
Method 2) Loan payments to the solo 401k trust can also be made by direct deposit via ACH payments.How to find your Fidelity brokerage routing number and 13 digit account number:
1. Log into your account on Fidelity.com
2. Click on the Non-Prototype account for your Solo 401k.
3. At the top, Click on the link labeled: “Routing Number”
Please let us know if you have any questions as we are here to help.

Convert After-Tax Solo 401k Funds to Roth IRA QUESTION:

I would like to roll over the balance in my Solo 401k Fidelity brokerage after-tax account into a Roth IRA account. If possible, I would like to transfer the money to an external Roth IRA that is managed by my financial adviser. Since I have never done this before, I have two quick questions for you:
First, is this an allowable transaction? If I recall correctly, in-service rollovers are allowed, but I wanted to double check. Do I need to transfer the after-tax money to my Solo 401k Roth Fidelity brokerage account first and then roll it over to the external account?
ANSWER:
Yes our solo 401k plan document allows for after-tax solo 401k contributions and the rules allow for the conversion of after-tax 401k funds to a Roth IRA.  As part of our ongoing compliance support, we assist in both documenting and reporting the conversion of after-tax solo 401k funds to a Roth IRA.
Moving the Funds From the after-tax solo 401k account to the Roth IRA:
By check. If y0u have received your checkbook from from Fidelity for your after-tax solo 401k brokerage account, make a check payable from the after-tax solo 401k account in the name of ROTH IRA custodian, write “After-Tax 401k Conversion” on the memo section of the check along with the Roth IRA account
If you have not received the checkbook,  then you can a form to Fidelity which we will complete and provide. On the form, you can elect to have the check mailed out to the Roth IRA custodian.

Nonprototype QUESTION:

My Fidelity brokerage account for the solo 4o1k that you provide is created and the description says

“NON-PROTOTYPE”
is this how it is supposed to read?

ANSWER:

Yes that is how Fidelity Investments labels brokerage accounts for self-directed solo 401k plans offered by My Solo 401k Financial because the solo 401k is not being provided by Fidelity.

Checkbooks QUESTION:

Now I have two non-prototype accounts with Fidelity opened. I dedicated one for pre-tax and one for Roth.

How do I get my checkbook accounts? I did not see it in the instructions. Or do I have to open the accounts myself? I need one for pre-tax, and another one for Roth.

ANSWER:

The check-writing feature is enabled and one of the forms you signed is called Check-writing Form. Once the account is funded initially, Fidelity will then process and mail you a checkbook for each source of funds (pretax and Roth). This process can take up to 2 weeks. They cannot issue a checkbook with a $0 balance per their policy.

If you need to fund and investment sooner or take out a solo 401k loan, we can provide a wire form.

Former Employer 401k Plan at Fidelity QUESTION:

Could my wife transition her former employer 401K at Fidelity (limited to a handful of mutual funds) to MySolo401K using Fidelity as the brokerage and invest in all allowed 401K options (such as passive real estate)?

ANSWER:

If your wife is self-employed with no full-time W-2 employees, she can certainly set up our solo 401(k) and then rollover funds from her former employer plan to a brokerage account at Fidelity (which we would set up as part of our services for no additional charge) and then invest those funds via the brokerage account or an alternative investments such as passive real estate since the account will be governed by our IRS approved 401(k) plan documents.

Distinguishing Account Sources QUESTION:

Thank you for assisting me in opening the three brokerage accounts with Fidelity under your self-directed solo 401k. To recap, I now have the following 3 (three) brokerage accounts at Fidelity:
  1. One for my Roth solo 401k funds
  2. Second one for my Pretax solo 401k funds
  3. Third one for my After-tax solo 401k funds
They all have a zero balance since I just opened them, but they are not labeled accordingly. How do I distinguish them?

ANSWER:

It’s really easy. After you sign in to view your Fidelity brokerage accounts, you will see a list of accounts. You will then click one of the three accounts, then click on “customize” at the top and the following screen pops up where you can rename the account.  You would repeat this step for each brokerage account. See the following link for more on this: https://www.fidelity.com/products/atbt/help/ActiveTraderTools_AccountGroups_Help.html

Options Trading QUESTION:

Can I trade options in this solo 401k brokerage account at Fidelity?

ANSWER:

Yes our self directed solo 401k plan allows for options. Additional steps to add it to the non-prototype account at Fidelity will apply. Please review the information at Fidelity.com: https://www.fidelity.com/customer-service/how-to-add-options-trading-to-your-account

Also, once your new Fidelity Non-Prototype has been opened, you will be able to add options trading to your account by logging on to your account and following the following instructions.

  • Once account is established will go to Fidelity website

https://www.fidelity.com/

  • GO TO: Accounts & Trade (on left hand corner)
  • CLICK ON: Account Features
  • CLICK ON:Brokerage and Trading
  • CLICK ON:Option
  • CLICK ON:Apply
  • Fill out Options Agreement (online and submit online-nothing to sign)

Private Investment QUESTION:

I am ready to wire money from Fidelity for one private equity investment.  Do I need to fill out any paperwork before I wire money?
How is the tax part handled when the returns are deposited in my account?  I am guessing the investment will be in the name of the Trust?

ANSWER:

Yes you will need to list the solo 401k plan as the investor in all of the private fund purchase documents. You can also use the “General Investment” form on our website to document the investment. Noe that you will not submit any of these mentioned documents to Fidelity Investments because they are not the Trustee of the solo 401k plan–your are the trustee, so you will safe-keep these investment documents. However, you will submit the Fidelity wire directive to have the funds wired from the solo 401k plan to the investment sponsor. When you are ready to make the investment, we can assist you in filling out Fidelity’s wire directive. To view a sample procedure when investing in a private fund, pleases CLICK HERE.
With respect to your question regarding the flow of the profits generated from the private investment, they will flow to the solo 401k brokerage account and continue to grow on a taxed deferred basis because a solo 401k plan is a tax sheltered vehicle.

SOLO 401(K)

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