Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
15y
Well, I won't be taking Rich Dad's advice on this or anything else.
His opinions on 401K's are well documented as simplistic and they don't apply to this situation. He is referring to most employees who choose to put money in their company 401K plan. The trustees of those accounts do put severe restrictions and charge high fees (not taxes). We are talking about something very different.
His basic complaints are 2 fold.
1) Most people invest their 401K funds in mutual funds which pay tax and have fees and expenses and have market risk..
This is irrelevant to our discussion. We are not investing in mutual funds.
2) He believes your income tax bracket will be higher when you take the money out than it is now. This may be true or this may not be true. If you think it will be true then you do a Roth and pay the tax now.
If you don't you do the reg 401K. Problem solved.
He also ignores the benefits of tax free compounding in the reg 401K.
As Kevin (and nearly every legit financial expert) says a 401K is one of the most powerful wealth building vehicles available.
Can you invest in money-losing things with it? Yes. But the vehicle itself is great and the solo 401K is the way to use it to its fullest potential.
Flipper/Rehabber · Anaheim, CA · Member since 2010 · 188 posts · 118 votes
12y
Dawn, it's a good question. Those providers with an annual fee are obligated to keep you up to date. John Park, the person who created my plan, has stated that he will keep me informed of any changes. But, to be honest, he has no obligation to do so. From what I have seen updates do not require a rewrite of your plan, just a few additional pages added on to stay compliant. With that in mind, it is up to me to make sure my plan stays compliant. It really comes down to your comfort level. If your plan was ever audited, I'm sure you would have enough time to hire a competent lawyer to look over your plan and add the additional pages needed.
Flipper/Rehabber · Anaheim, CA · Member since 2010 · 188 posts · 118 votes
12y
@David Beard - the only annual/recurring work that I am aware of for my 401K is accounting/bookkeeping which you don't need a 401K administrator for and to file a 5500-EZ if your account is over $250,000. Filling out and filling form 5500-EZ is a piece of cake. It's a very short form.
SFR Investor · Dallas, TX · Member since 2009 · 71 posts · 12 votes
12y
Originally posted by @Dmitriy Fomichenko:
Originally posted by @Dawn Vought:
Chris - If John Park does not charge an annual fee, what happens when your plan needs to be updated or restated due to required changes in the law?
For All - If you get your plan through one vendor but don't like their on-going service, does anyone know if you can just get needed updates from someone else? Or do you have to pay for whole new wording, even though you have a current plan?
Dawn, if you have to move away from one document sponsor, it is unlikely that new sponsor will accept the original documents and just provide you with the updates. To be compliant, the updates must "fit in" with the original documents. And since original documents where not provided by the new sponsor, they will not work. We are heading into new PPA Restatement period later this year and all current plan documents from any and all sponsors will have to be restated (replaced with the new set of documents) in order for the plan to maintain it's qualified plan status. Make sure that you use the provider who will keep your plan documents up to date, otherwise your entire account is at risk.
Hello @Dmitriy Fomichenko , you bring up a good point. Is there any recourse if the original sponsor is no longer in business? are we left in the dark?
I have been extremely happy with Mark Nolan and the folks at www.mysolo401k.net. They have been very responsive to my questions, whether by phone or email, and their fees are as low as anyone's (and posted right on their front page, which is nice and very transparent).
I asked quite a few questions on the front end about their company. They are staffed by extremely experienced attorneys and assistants who have many years experience with all types of retirement plans.
I had been asking Mark questions via email and then he suddenly refused to answer any more until we spoke on the phone. So I called him. I asked him a question for which he clearly either did not know the answer or was trying to conceal the truth, as he tried to bluff his way through it. I pressed him further on it and rather than admit he did not know or the truth, he became defensive. If this is how he treats a potential new clients, It could be grim once you became captive as a 401(k) customer. And as has been discussed and confirmed above, you do essentially become captive to which ever facilitator you select.
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
12y
@Bruce M. Bruce, sorry to hear that. What was your question, assuming it was of a general nature and doesn't disclose any of your personal information? Have you gotten a satisfactory answer to the question from any other provider? There are certain questions of a gray nature that these companies may not provide black and white answers to, such as opining on certain proposed investments or strategies. I have asked Mark lots of questions, and the answers were always sound, as are their credentials. I can certainly understand someone not wanting to spend huge amounts of time typing up back and forth email replies when a phone conversation can resolve things quickly. At any rate, I hope you find a satisfactory plan provider, and will be interested who you go with, such as Dimitriy's company. Since you're currently shopping, your findings will be very helpful.
I have been extremely happy with Mark Nolan and the folks at www.mysolo401k.net. They have been very responsive to my questions, whether by phone or email, and their fees are as low as anyone's (and posted right on their front page, which is nice and very transparent).
I asked quite a few questions on the front end about their company. They are staffed by extremely experienced attorneys and assistants who have many years experience with all types of retirement plans.
I had been asking Mark questions via email and then he suddenly refused to answer any more until we spoke on the phone. So I called him. I asked him a question for which he clearly either did not know the answer or was trying to conceal the truth, as he tried to bluff his way through it. I pressed him further on it and rather than admit he did not know or the truth, he became defensive. If this is how he treats a potential new clients, It could be grim once you became captive as a 401(k) customer. And as has been discussed and confirmed above, you do essentially become captive to which ever facilitator you select.
No way could I consider working with him.
Hello Bruce,
I am not taking sides and not trying to start a war but as far as my queries Mark and Dmitry both has been very responsive and helpful. But has not selected my sponsor yet. So far this is the first post I have come across unhappy with Mark. Always there are two sides to a coin, so blasting a service provider even before starting a relationship would certainly hurt his business and frequent posters like @David Beard has been successful with him.
I myself am looking at both @Dmitriy Fomichenko and Mark and I am not affiliated with Mark.
No offense and good luck and let us know who you went with.
Concord, CA · Member since 2012 · 3 posts · 2 votes
12y
Bruce,
Mark is a very patient guy and loves to educate individuals on the process. You were very aggressive and it sounded like you only wanted to get into the business of offering solo 401k plans instead of researching if you qualified. Mark politely told you that he cannot mentor you on the solo 401k provider business. In sum, Mysolo401k would gladly continue to educate you on the solo 401k rules and regulations just not on how to get into the business of being a solo 401k provider which takes years of experience.
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
I agree with @Jeff Boyle , Mark is a great guy and very knowledgeable. Of course I was not part of the conversation, but just like @Bala P. said there is always two sides of the coin...
Mark is a very patient guy and loves to educate individuals on the process. You were very aggressive and it sounded like you only wanted to get into the business of offering solo 401k plans instead of researching if you qualified. Mark politely told you that he cannot mentor you on the solo 401k provider business. In sum, Mysolo401k would gladly continue to educate you on the solo 401k rules and regulations just not on how to get into the business of being a solo 401k provider which takes years of experience.
By attempting to defend his actions, you have confirmed his actions for all to see. Polite? BS, he was down right rude and dismissive.
Flipper/Rehabber · Anaheim, CA · Member since 2010 · 188 posts · 118 votes
12y
@Bruce M. , what was your question to Mark? Were you or were you not trying to get information from Mark on how to run your own solo 401k provider business? I have a much different opinion of Mark and reached out to him. He confirmed everything @Jeff Boyle stated above. I don't even have a plan with @Mark Nolan and he has taken the time by phone and email to answer my questions regarding solo 401k's. I'm really not sure why you are taking the time to tarnish someone's name and business. But if it's because he wouldn't agree to teach you to be a competitor than that is just disgusting.
Canton, NC · Member since 2009 · 11 posts · 3 votes
12y
If there is a failure involving the late adoption of good faith amendments, interim amendments, or amendments required to implement optional tax law changes, as described in Rev. Proc. 2013-12,section 6.05(3)(a). See Rev. Proc. 2013-12, section 12.03(2). then to correct for the missed amendment you have to pay a fine of up to $750 and go through the IRS Voluntary Compliance Program to avoid severe fines and penalties
Canton, NC · Member since 2009 · 11 posts · 3 votes
12y
You might want to have a professional check your work. I had a friend who was hit with a $1800 fine from the IRS for forgetting to sign the 5500EZ form.
He filed in June 2013 and the IRS reviewed the filing in August ( After the July 31st Due Date). The IRS said the filing was incomplete and therefore not accepted. He could not correct and refile as he had not filed for an extension. 5500EZ filings with the IRS does not have the Delinquent Filer Program like the Dept of Labor does for those who file 5500SF instead of the 5500EZ.
Consider always filing an extension even if you are an early filer or file a 5500SF instead of the 5500EZ
Canton, NC · Member since 2009 · 11 posts · 3 votes
12y
If you make an error or forget something when filing a 5500EZ for your Solo-k plan with a balance over $250,000 you currently have no recourse to correct the error other than to throw yourself on the mercy of the IRS.
The IRS has just opened a penalty free correction opportunity for anyone making and error or who has made errors in the past.
The IRS will not impose any penalty on Solo 401k plans for delinquent filing of a Form 5500EZ return if the applicant submits to the IRS:
A complete Form 5500EZ return, including all required schedules and attachments, for each plan year for which relief is requested. Each late Form 5500 return must be marked, in red letters at the top margin of the first page, "Delinquent return submitted under Rev. Proc. 2014-32, Eligible for Penalty Relief."
A completed paper copy of the Transmittal Schedule provided in the appendix of Revenue Procedure 2014-32, attached to the front of each delinquent return.
Multiple Form 5500 Series returns covering several plan years can be included in a single session.
Under the new procedure, delinquent filers can submit an application for penalty relief from June 2, 2014 until June 2, 2015.
Future correction opportunities may not be penalty free so take advantage.
Investor & Attorney · Chicago, IL · Member since 2014 · 86 posts · 29 votes
12y
I spoke with @Mark Nolan at www.mysolo401k.net today about setting up an account. He was extremely patient and helpful. He didn't pressure me into signing up at all. He just educated me. Most of the comments here lead me to believe they run a reputable business. I think mysolo401k.net just gained a new customer.
Investor/Syndicator · North Aurora, IL · Member since 2013 · 167 posts · 70 votes
12y
Does anyone have an opinion on the best use of solo 401k funds use? There seems to be "many" restrictions if you buy realestate inside the plan. How about notes or loans?