Solo 401K conversion?

7 Replies

I currently have a checkbook IRA that I set up through my SD IRA account. Is it true the Solo 401K doesn't have fees?? If so, How do I go about converting my checkbook IRA from my SD IRA company to a 401K account? I'm self employed, no employees.......

@Robin Cornacchio

There is a cost to establish and maintain Solo 401K Plan but since custodian is not required for the plan all custodian, asset-based and transaction-based fees can be eliminated.

Based on what you said - you qualify. Decide which service provider you wish to use and engage service, when new plan is established you will rollover you assets from an IRA to 401K.

@Robin Cornacchio

The solo 401k plan is generally a little more. There are also tax return 5500 that needs to be completed. 

I believe the solo 401k is better than the checkbook Ira from a compliance standpoint even if it costs a little more. Admin costs are $275 for checkbook Ira and $300 for solo401k

@Robin Cornacchio

Yes, you can convert and there will be no fees. I went through it myself. If you need recommendation, feel free to reach out. I'm happy with the process/the company I went through. 

@Robin Cornacchio

As others mentioned, there are fees to establish and maintain a Solo 401k which provides for checkbook control, real estate investing, etc.

Of course, the threshold considerations are whether (i) you are eligible (i.e. self-employed with no full-time w-2 employees) and (ii) retirement funds in an account that you can rollover (i.e. former employer plan and/or non-Roth IRA that is invested in investments that can be liquidated an acceptable cost).

Assuming that you cross these threshold issues, here are some additional comments/considerations:

1. Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).

2. You may wish to confirm that the new 401k provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).

3. You may wish to confirm that the new 401k provider will handle the ongoing compliance support such as any required 5500 filing (e.g. 5500-ez for a one-participant plan with assets in excess of $250,000), any required tax reporting (e.g. 1099-r in the event of a distribution or in-plan Roth conversion), mandatory plan updates and amendments, etc.

4. If you might take a 401k loan, you may wish to confirm that the new 401k provider will prepare the required 401k participant loan documents.