Solo 401k funds held at Wells Fargo... inactivity is a problem?

16 Replies

I have a solo 401(k) and the funds are held in a business checking account in the trust's name at Wells Fargo.  Apparently Wells Fargo is the most popular bank to use for this.  

I just found out that if I don't make a transaction at least once every 60 days, they may make the account "dormant" for inactivity.  How do people deal with that issue with a 401(k) since only certain transactions are allowed?  It's been about 60 days, and I'm getting ready to write a check for an investment, but the check could get returned if they happen to make the account "dormant" just before it clears.  

In a similar issue, they already closed one of my two accounts (one is for Roth 401k funds and one is traditional) because it was inactive for a few months and had a zero balance.  They didn't even notify me, they just closed it and never told me.

First, find another bank. My bank (and many others) charge inactivity fees also but you can get longer periods before the fees kick in. My solo 401k has two accounts: a savings account and a checking account. Every once in a while I transfer $1 from one to the other and, often, back again. I do the round trip to show my displeasure with the requirement (and the fact that they were charging inactivity fees without informing me) and to demonstrate that it will have no effect on how often I use the accounts for substantial business.

I used Wells Fargo because that seems to be the one that everyone uses for solo 401k accounts (because most banks don't know how to set up the accounts for a solo 401k, but there two guys at the San Diego branch of Wells Fargo that knows how to do it - Juan Morales and Adriel Zaghi, so everyone does it through them).

But the idea of having both a savings and checking account for the same 401k and shifting $1 back and forth would be one way to do it I guess.  

Originally posted by @David O. :

I have a solo 401(k) and the funds are held in a business checking account in the trust's name at Wells Fargo.  Apparently Wells Fargo is the most popular bank to use for this.  

I just found out that if I don't make a transaction at least once every 60 days, they may make the account "dormant" for inactivity.  How do people deal with that issue with a 401(k) since only certain transactions are allowed?  It's been about 60 days, and I'm getting ready to write a check for an investment, but the check could get returned if they happen to make the account "dormant" just before it clears.  

In a similar issue, they already closed one of my two accounts (one is for Roth 401k funds and one is traditional) because it was inactive for a few months and had a zero balance.  They didn't even notify me, they just closed it and never told me.

I had my Solo 401k at Wells Fargo until Jan 2016, then I moved it to Navy Federal Credit Union. NFCU set up a business account for me and they were familiar with these types of accounts. I pay a $1.00 monthly fee to allow mobil deposit and no other fees are charged.

The other option is to make a loan to yourself, which is allowed by your 401k (read your book about this) and then make monthly payments to your 401k and it will no longer be dormant.

I don't know if I want to bother with moving to another bank quite yet, but the loan-to-self option is another possibility.  Do you have forms or loan documents that you used to set up the loan?

I bank with Wells Fargo and am getting ready to open my Solo 401K and was thinking of having Wells Fargo for the account but am worried about all the troubles they are having lately. What happens if I have my Solo 401K there and they happen to go under? Will all my funds be lost?

My solo 401K is with Charles Schwab. I have 2 accounts with them, these each have their own set of rules (the two accounts were intentionally set up by them because of this). Shortly after I set this up I needed to make sure I could write checks for my townhouse I bought in February of 2021. Before this I was having trouble getting a bank to understand what kind of account I needed. Most bank don't do this type of account.

Best of Luck to all future Solo 401K's

Melody Dawson

MeloLife TTEE

@Melody Dawson

This was a bigger problem in the past than it is today. It is still common for most bankers at a branch of one of the big banks to get confused by a request for a Solo 401k checking account. However, there are banks that specialize in these types of accounts and serve all 50 states. Solera National Bank and Titan Bank can open accounts online, fully understand these structures, and generally offer checking accounts without large minimum balance requirements or monthly maintenance fees. Our clients have really benefited from the convenience of these banks.