Solo 401(k) documents

[Steven Burrows]

Is it possible to setup a solo 401(k) on your own. I've been researching solo 401(k) providers and I am having a problem getting my head around the cost some providers are charging to provide the documents (800.00 and more). Aren't they just using a boiler plate type document and inserting your company info into the blanks? I don't mind the yearly maintenance fees to keep mu documents current, but really, 800.00 to fill in the blanks and send the documents to me. Are there any companies that will provide the docs only?

[Brian Eastman]

@Steven Burrows

You can obtain a self of 401k documents reasonably inexpensively from a custodian or a firm whose focus is marketing and low cost.

You could also go to the medical supply store and obtain some specialty surgical devices.  But would you know what do do with them?

Retirement tax law and the correct usage of a Solo 401k plan are not something that most folks should take on DIY.  Is it really worth saving $500 or even $1000 and putting your entire retirement savings at risk of IRS penalties?

A Solo 401k has record keeping and reporting requirements, as well as a need to adopt amendments reflecting changes to the tax code.

Most importantly, the usage of the plan must be within IRS guidelines and the rules are somewhat complex.  At Safeguard, we speak with hundreds of investors who are considering a self directed plan each month.  A very significant number come to us with serious misconceptions about what may be done with a plan or how they can be involved in plan transactions.  The internet is not a tax advisor.

When you implement a self directed retirement plan, you are not just filing some documents and getting a checkbook.  If you approach this correctly, you will have a professional advisor on your team to help you get the most out of this very powerful tool while operating in a compliant fashion.  

Even the more expensive providers of such plans in this specialty field are providing a tool of excellent value as compared to the expenses associated with investing on Wall St.... or the ongoing asset-based and transaction fees you may encounter with a self-directed IRA custodian. If you were to pay $1000 or even $1500 and a small annual fee each year, for a plan you will use for decades, the administrative overhead is negligible. Your focus should be on the value you receive from the plan provider in their guidance and support of the plan.