I Don't Need a Custodian nor LLC for a Self-Directed Solo 401k?

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The following language from the listed IRS website confirms that the solo 401k business owner can serve as trustee of his or her solo 401k plan; however, a custodian is required to hold the liquid cash. 

IRS Language“Trusts and trustees. 401(k) plans are funded through a trust established to hold and invest the plan’s assets. At least one trustee is appointed to have responsibility for the activities of the trust and its assets. This is a serious responsibility with considerable potential for liability. Trustees might include the business owner, an employee, or a financial or trust institution.”



Great question. A Self-directed Solo 401k utilizes an approved 401k that a facilitator updates the each year. The legal entity is a Trust. Just like the LLC, it will have its own EIN and you can open a bank account to operate out of it.

This is contrasted with an IRA, which needs a custodian to hold it and an LLC which would go inside it to hold the assets.

Looking forward,


Hi William,

Just saw the other question now.  The bank is not a custodian per se in this case - they are simply holding the money for you, but do not do any reporting to the IRS for the 401k.

 @William DeHaan , Jay is correct. The bank you choose to open a checking account for your 401k trust is not the custodian. Although some custodians do open Solo 401ks, with a 401k there is no custodial requirement. In the typical setup where you have checkbook control of your 401k, there is no custodian involved and this can save you quite a bit of time and money in the long run.