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.”
Okay, I see that now, and hence no need for an LLC as the Trustee would have "check writing" authority.
So would not the Bank be the "Custodian" holding the liquid cash?
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.
Yes the bank would hold the liquid cash.
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.