Guide for Choosing a Solo 401k Provider

Having been in business since 2009 and with over 8,000 clients, we have spoken to thousands of self-employed individuals who have opened and have considered a solo 401k plan to save for retirement, take a solo 401k participant loan, invest in alternative investments such as real estate, notes, tax liens, private equity, cryptocurrency (bitcoin), and equities. They often note that there are a number of solo 401k providers in the market and seem to struggle with how to choose the right solo 41k provider. Selecting a solo 401k provider is certainly an important decision as choosing the wrong one could dramatically affect your retirement account’s future.

Following are the most important considerations when deciding which solo 401k provider to work with.

SOLO 401K PROVIDER CONSIDERATON #1: EXPERIENCE & EXPERTISE

While the IRS has consistently recognized that a solo 401k plan allows for the self-employed business owner to serve as trustee of his or her solo 401k plan including the alternative investments, they have also increased their IRS compliance checks in the last couple years. They have also found that some solo 401k plans contain violations.  This is not surprising as the solo 401k plan rules are complex with pitfalls for the uninformed. For this reason, it is important to work with a company that specializes in solo 401k plan compliance rather than a provider that “dabbles” in solo 401k plans or does not have a proven compliance record. Moreover, you should select a provider who will make sure that you work directly with an attorney and other compliance professionals throughout the entire solo 401k plan setup process.  These attorneys and professionals can ensure that you satisfy the solo 401k requirements that apply to your specific circumstances.

If you select My Solo 401k Financial:

  • You will work with a fully staffed company that specializes in the solo 401k plan rules. My Solo 401k Financial has helped thousands of clients and offers an IRS-approved 401k/PSP plan that will allow you take 401k participant loans, Roth 401k contributions, voluntary after-tax contributions, and invest in alternative investments such as real estate, notes, tax liens, private funds, and equities, to name a few without paying taxes or penalties.
  • Throughout the entire solo 401k setup process, you will work with directly with our compliance professionals.  Our Leaders are a Harvard Law-trained attorney and a Compliance Officer with over 30 years of combined experience.
  • This experience and expertise are backed by our Audit Guarantee.

SOLO 401K PROVIDER CONSIDERATON #2: RESPONSIVE SERVICE

At My Solo 401k Financial, we understand that that time is of the essence. Quick access to your funds is imperative as you may need to take solo 401k participant loan, meet the solo 401k setup plan deadline, or meet a closing deadline or for an important and time-sensitive investment. Therefore, it is important to choose a solo 401k plan provider who is very responsive to your questions and solo 401k needs to ensure that your solo 401k transaction is completed as fast as possible.

Once you select us as your solo 401k provider, we are laser-focused on guiding you through the entire solo 401k setup process as fast as possible.  The pacesetter for many transaction is typically the time that it takes the administrator(s) of your current retirement account(s) to transfer your retirement funds to your new solo 401k 401k plan (e.g., former employer 401k, Rollover IRA, etc.). Given that this transfer step is usually the part of the process that takes the longest amount of time, we start the transfer process as soon as you confirm where you would like to transfer the funds from including completing the transfer paperwork to ensure that the funds are transferred quickly and in a manner that won’t trigger taxes or penalties.  We are well-versed in these forms and in navigating the transfer process.  In our experience this may include contending with companies that don’t make it easy for you to transfer out your retirement funds.  With the assistance of an experienced team such as My Solo 401k Financial, we are with you at every step of the way to “make it easy”.

If you select My Solo 401k Financial:

  • You will work with a company that provides highly responsive and superior customer service.  Our glowing customer testimonials are a testament to this.  Our “A-plus” Better Business Bureau rating with  no customer complaints & over 105 five star reviews further demonstrates our dedication to ensuring that our clients are provided exceptional customer service.
  • You will work with a solo 401k provider that is laser-focused on completing your solo 401k setup as fast as possible including a team that has the experience and expertise to ensure that your retirement funds are transferred from your existing account as fast as possible.

 

SOLO 401K PROVIDER CONSIDERATION #3: EDUCATION, NOT SALES

Given the number of important compliance requirements and eligibility requirements applicable to a solo 401k plan setup, it is important that you understand those requirements at the outset. Therefore, it is important to work with a solo 401k provider that emphasizes education (rather than sales) so that can you make an informed decision whether you qualify for a solo 401k to understanding the rules and regulations before you process an investment or make an annual contribution, for example. Moreover, you should understand not just the requirements to open a solo 401k plan (self-employment activity with no full-time employees in any of your businesses to not run afoul with the controlled group rules, etc.), but also the ongoing compliance requirements (e.g., plan updates including the year 2020 IRS required plan update that will apply to all solo 401k plans, allowed investment types and the rules associated with such investment, 401k loan rules, distribution rules, contribution rules, Form 5500-EZ filing requirement, voluntary after-tax or pretax conversion to a Roth account reporting and rules, etc.).

If you select My Solo 401k Financial:

  • You will meet with our compliance professionals to understand the initial and ongoing solo 401k requirements and how they will apply to your circumstance. During this review, we may discover you may be a better fit for one of our retirement plans.
  • You will never work with a sales person since we don’t have any.  Instead you will work with professionals who emphasize education and compliance rather than sales and commissions.

SOLO 401K PROVIDER CONSIDERATION #4: RECORDKEEPING & ONGOING COMPLIANCE SUPPORT

Establishing a solo 401k plan is not merely a one-time transaction.  There are a number of ongoing important compliance requirements that must be satisfied.  At the end of day, your self-employed business will sponsor a 401k plan and it will be imperative to keep the plan in compliance.  The compliance requirements do not apply to all plans in the same way and the particular requirements that apply to you will depend on the facts and circumstances of your business (e.g., 401k loans, contributions, etc.).  Therefore,  it will be important to choose a solo 401k provider with the experience and expertise necessary to help you navigate the ongoing compliance requirements that apply to your specific 401k plan.  Moreover, you will want to consider whether the specific person at your solo 401k provider has the requisite expertise to understand and identify compliance issues that might apply to your solo 401k plan and whether this person will be there for you and for the life of your account, or are they merely just looking to make a quick buck by taunting a low setup fee with no ongoing fees. You get what you pay for.

We are 401k and IRA retirement plan experts (this is all we do 24/7) and as such we have the experience and expertise to identify the compliance requirements that will apply to your plan.  Moreover, rather than a salesperson who may move on to another company leaving you to build a new relationship with whomever is left to handle your account, you will work directly with our owners throughout the entire solo 401k process and will therefore be intimately familiar with your account for the life of your 401k plan.  This important service difference truly sets us apart from the rest.

If you select My Solo 401k Financial:

  • You will work with a company that provides all of the ongoing compliance support for your solo 401k plan which will ultimately allow you to grow your retirement account.
  • You will work directly with our compliance professionals throughout the entire solo 401k process and beyond which will ensure that you always have someone who is familiar with your solo 401k plan.

 

Insider Tips for Choosing the Right Solo 401k Provider

TIP # 1 – Be wary of a solo 401k provider offering a discount in order to encourage you to sign up as this suggests they have not been in business for very long, simply dabble in the solo 401k setup in November or December (but won’t be there in future months to assist with compliance questions or reporting), don’t have a proven business record, have a website with little information on the rules and regulations, don’t have a better business bureau page, as this may indicate a culture of sales rather than a focus on compliance.

TIP # 2 – Look for a solo 401k provider that allows you to speak to their compliance professionals when you first call so that you can get all the facts on Day 1 and not from a salesperson.  If you ask questions and are continually placed on-hold in order to “find the answer” or “double-check with someone” it’s a good indication that the person you are speaking with is not well-versed in the solo 401k rules.

TIP # 3 – Work with a solo 401k Provider who is seeking to build a long-term relationship such as by having you work directly with compliance professionals on Day 1 instead of a salesperson who then passes you off to various customer service representatives who may leave the company and leave you left to build a relationship with someone else at the company.

TIP # 4 – Look for a solo 401k provider that offers record keeping and ongoing compliance support (including the 2020 IRS required plan update, 5500-ez filing if required, etc. at no additional charge) as the regulatory guidance indicates that most violations occur in a failure to comply with the ongoing solo 401k compliance requirements.

TIP # 5 – Avoid a solo 401k provider who is trying to get you to use their bank to hold the solo 401k funds instead of working with your bank, credit union or brokerage firm of choice. Not only does this indicate that they are not 100% focused on completing the core service that they are paid to provide but it is also indicative of a company that is more focused getting kickbacks from the bank that they recommend.

TIP # 6 – Look for a solo 401k provider that proactively explains not only the initial solo 401k requirements but the ongoing compliance requirements before you even proceed with the transaction.  This is important to ensure that you make an informed decision and also indicates that the company is focused on your long-term compliance and success over making another sale.

TIP # 7 – Look for a solo 401k provider who explains how truly long the solo 401k process takes from start to finish including how much time it takes for each step in the process.  This will be especially important as you are trying to meet an investment deadline.

TIP # 8 – Look for a solo 401k provider that is well-versed in the process to transfer your money from your existing 401k, IRA or other retirement account(s) and specifically from the financial institution(s) holding your funds (e.g., VOYA, Empower, Vanguard, Fidelity, etc.).  Not only is it important to ensure that the funds are transferred in a manner that will not incur taxes or penalties, but an experienced professional can also ensure a smooth transfer process so that the funds can be utilized as quickly as possible.

TIP # 9 – Look for a solo 401k provider who has 1000s of clients and 100% audit success rate as this is strong indicator of an excellent combination of experience and expertise.

TIP # 10 –Look for a solo 401k provider who stands behind their offering with an audit guarantee.

 

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