Clients of My Solo 401k Financial have used 1st Bank to hold their solo 401k funds. A self-directed solo 401k from My Solo 401k Financial allows for the funds to be held in a bank account in the name of the solo 401k plan. This is possible because My Solo 401k Financial is the solo 401k plan provider and assists the trustee of the solo 401k plan perform the required reporting for the solo 401k plan. Therefore, the bank or the credit union will simply hold the solo 401k funds but will not be responsible for preforming the applicable solo 401k reporting such as the issuance of Form 1099-R or Form 55000-EZ.
When opening the holding accounts (bank accounts) for the solo 401k at a bank such as 1st Bank , separate bank accounts may be required for each source of solo 401k funds and for each trustee. The need for separately tracking the participants’ funds and sources under the plan is satisfied through the use of multiple bank accounts.
One Participant in the Solo 401k Plan
For example, if the solo 401k plan only has one participant, 1 (one) to 3 (three) separate bank accounts may be needed depending on whether or not the participant chooses to make all three contribution types (pretax, roth and voluntary after-tax) or chooses to convert pretax or voluntary after-tax funds to the Roth solo 401k bucket.
For example, if Sarah is the sole participant in her solo 401k plan (the ABC Trust) and she chooses to make all three contribution types, she will need three separate bank accounts and they would be titled as follows:
- XYZ Trust (Pretax), Sarah Byrd, Trustee
- XYZ Trust (ROTH), Sarah Byrd, Trustee
- XYZ Trust (After-Tax), Sarah Byrd, Trustee
Two Participants in the Solo 401k Plan
If the solo 401k has 2 (two) participants, a total of 6 (six) participant bank accounts may be needed if both participants choose to make all three contribution types (pretax, roth and voluntary after-tax).
For example, if Sarah and her spouse Jack both participate in the solo 41k plan and both choose to make all three contribution types, a total of 6 (six) separate bank accounts will need to be opened up and titled as follows:
3 Accounts for Jane
- XYZ Trust (Pretax), Jane Do, Trustee
- XYZ Trust (Roth), Jane Do, Trustee
- XYZ Trust (After-Tax), Jane Do, Trustee
3 Accounts for John
- XYZ Trust (Pretax), John Do, Trustee
- XYZ Trust (Roth), John Do, Trustee
- XYZ Trust (After-Tax), John Do, Trustee
The Same Solo 401k Employer Identification Number (EIN)
The same EIN applies when opening separate bank accounts for each source of funds (e.g., pretax, roth and voluntary after-tax) since they are part of the same solo 401k plan. After all, the purpose of separate bank accounts is to meet the IRS requirement of separately accounting for each source of funds under the solo 401k plan.
Lastly, CLICK HERE to view a bank account guide to present to 1st Bank when opening he solo 401k bank account(s). A banking packet can also be put together by My Solo 401k Financial for submission to the bank.
