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I'd like to set up a Solo 401K. It is my understanding that…

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I'd like to set up...
I'd like to set up a Solo 401K. It is my understanding that I first need to set up a Trustee, which would be myself, and I need an Operating Agreement and 401K Policy document on file for the account. I would then take all that to a bank and have it set to receive and send money, hold the proceeds, etc. Do you offer information on how to go about doing these steps? There are companies that provide a 'full service' for $800 or so, but it seems something I can do myself.
Submitted: 1 month ago.Category: Tax
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Answered in 7 minutes by:
3/12/2018
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,024
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

I’m reading your question now.

Bear with me a moment while I type up my response.

….

Then if you have further questions we can go from there.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

What you're describing is a S"self-directed" plan.

...

All plans must have a plan document

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See this. Here's a sample:

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https://www.deferral.com/dts/content/implement/plandoc.asp

...

If you go with a Vanguard, or fidelity or one of the MANY 401(k) custodians, you'll use their "volume submitter document" but be constrained to use their fund/investment choices.

...

If you want to control the investments completely, open up to alternative investment, etc. then you'll need to get someone to do the plan document for you (AND be available to do the required updates when the law changes (for example all documents had to be updated to allow for the IRA waiver of penalties for hardship under Hurricane Harvey and others.

...

And you'll have to take the risk that comes around prohibited transactions, filing the plan's 5500 filings once you hit 250K in assets, etc.

...

That's what's being paid for by those 700 to 800 fees you see

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

The cheapest plan designer I've seen out there is Pension Administration and Trust Accounting ...

...

As a fee only adviser I use these folks for the plan document

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

But there are many out there ... And again, the operating agreement is an LLC document. Qualified plans need a plan document.

...

THIS https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans_0.pdf is the level of detail that one should be familiar with, if you truly want to go it alone

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

It's also important to understand that for a 401(k) - unlike SEPs which can be set up any time before tax filing - the plan must be established (via an adoption agreement) by Dec 31

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