Solo 401K LLC Bank Account

6 Replies

I've established a Solo 401K/LLC (similar to the IRA/LLC structure), but I am having trouble getting the LLC's bank account created. At BoA and Wells Fargo, their applications assume the business owner is an individual, and require information such as first/last name, date of birth, SSN, etc. Since the LLC is owned by the 401K Trust, I am hesitant to use my information and have the account reference my name in an ownership capacity. Has anyone else encountered this issue, or can suggest a bank that has the know how to open an account with the 401K/LLC structure?

Brandon, with the truly self-directed Solo 401k plan you don't need an LLC to have a checkbook control over your retirement funds. Such plan is established with Solo 401k trust to hold plan assets instead of using a trust company (custodian). With an IRA custodian is required so the only way to gain checkbook control is to use special purpose, single-member LLC that is owned by the IRA.

Bank account can be easily open for a 401k trust. Was there a specific reason why use used an LLC?

Reach out to @Kreighton Reed , he can help you get bank account open in no time. 

Thanks @Dmitriy Fomichenko

@Brandon H. We specialize in these 401k/IRA checking accounts and open over 50 a month for people around the country.

To answer your concern: if your are a signer on a US bank account by order of the Patriot Act every bank is required to gather your personal information. If that wasn't the case every criminal and money laundered would simply open a business account to hide their identity from the government.

Don't confuse them gathering your information with the account showing you as owner of the account. Every business account (except sole props) is owned by the business or trust and the signers are just that... authorized signers. Being a signer does not connate ownership. For example many businesses owners add their internal accountants or secretaries as signers on accounts to manage the day to day operations of the account and they do not have ownership in he business.

I agree with Dmitriy... a trust for a 401K is a lot easier to use than a LLC. The LLC has annual fees from the state and registration fees.

@Dmitriy. To answer your question, I was looking to limit any potential liability that could arise from one of the plan's investments. However seeing as how 401Ks are fairly well protected, creating an LLC does seem to add unnecessary complexity and fees as @Kreighton Reed mentioned. Thanks for the feedback, you both have given me something to discuss with my CPA. Also for what its worth, I checked out TD Ameritrade and their application has an explicit designation for an IRA LLC when opening a business account.

Brandon, while you should be able to open a brokerage account for your IRA LLC at TD Ameritrade it will not be a business checking account you can open at the bank. While it may offer check-writing ability agains your account it will luck some important features that are needed when investing in alternative assets such as real estate: debit card, ability to do a wire transfer, mobile deposit and others. All of those features are available with the business checking account at Solera.

@Brandon H.

You have received some good advice.  The folks who established your Solo 401(k) really should have been able to guide you through this and saved you the headache, however.

Kreighton and his team at Soleara have tuned into the fact that mainstream banks are A) generally not very capable and B) pretty much in the dark when it comes to accounts held by a self-directed retirement plan. Once you get out of the box at all, they are pretty helpless. We have a lot of clients using Wells Fargo and B of A for Solo 401(k) trust accounts or accounts for IRA-owned, LLC's, but it commonly involves educating the banker sitting across the desk from our clients. Having a resource like Soleara that is knowledgeable and has put together a program specifically for these plans is great.

The LLC may have some value for your plan, which would be for asset segregation purposes within the plan. If you were going to put 50% of your plan value into an asset with liability risk such as real estate and 50% of your plan value into non-risk assets like stocks, cash, precious metals, etc., then having the 401(K) isolate the property under the LLC would be a good idea. That would shelter the non-risk assets which would be held directly by the 401(k) trust.

BTW, You can open a trading account for the 401(k) trust somewhere like TD Ameritrade or Charles Schwab in addition to having a business checking account for cash management and alternative assets such as real estate.

If your intention is for all the plan assets to be in the LLC, it is just an extra layer with little value. I would probably dissolve the LLC and just operate from the 401(k) trust directly.

@Brian Eastman  

To your points A and B, I have noticed this being the case. It took quite a bit of effort to set up the 401K trust account at Schwab. Many of the people I spoke with at Schwab were confused, and after having them lead me down one rabbit hole after another, I was finally able to connect with a representative that knew exactly what I was trying to accomplish.

Regarding your comments on the LLC, what you have described is the strategy that I am looking to employ. I established the trust account at Schwab to invest a portion of my assets in publicly traded securities. Meanwhile I am looking to have an LLC (or others in the future) to segregate different types of major (alternative) investments (eg. real estate, start up businesses, etc.). It's a strategy that I am going to review with my accountant since everyone has provided some good insights.