Self direction i401k with checking AND brokerage
I am strongly considering opening a Self Administered, Self Directed i401k so that one of the investment vehicles can be - you guessed it - real estate notes and mortgages.
With that said, I don't want to preclude myself from having a brokerage account to hold cash and hopefully earn some money in the stock market when I don't have the money lent in real estate.
My question is this: Do the brokerages (IE: Fidelity, etc), understand this arrangement? It seems to me I would first open the i401k, get an EIN number for it, and then open a REGULAR brokerage account in the name of the i401k. Sounds simple to me, but am I going to run into roadblocks trying to get this done?
Second question: Who do you recommend for initial setup of the i401k? I found SunWest Trust and while I don't mind the initial $500 setup fee, I'm not thrilled with their $200 annual fee for doing basically nothing. Is there another option that is more cost effective? Heck, can I do the whole thing myself?
Thanks!
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I used Sense Financial to setup my Solo 401k and have been very happy. You need to make sure your documents speak to a brokerage account. They took care of that for me.
I then use OptionsXpress as my brokerage. It's owned by Schwab. It was a smaller broker focused on complex options and bought by Schwab keeping the trading platform. You will not be able to set it up online. You will have to talk to a real person. And you may have to talk to more than one person to get them or any broker to realize you are not trying to setup a 401k managed by them. But you are trying to have the same trading rules. Most brokers have 401k product they will want to sell you having no idea what a Solo 401k is or how you might be the Trustee. I contacted several, same at each.
Even my large nationwide bank took some time to explain that I wanted an account not a managed 401k by them. Sense Financial has a pretty good cheat sheet for the bank. You better know the broker rules yourself. You don't want to have prohibited trades in allowed in your account.