Best institute for Solo 401k

[Patrick Lombardo]

Would like to roll a small annuity I have from a short lived stint in a union into a solo 401k.   I own a self operated carpentry company with no employees.   I would like to access those funds for RE investments.   Looking for guidance on who to roll it into and who offers great terms and support.   TIA!    

[Brett Synicky]

 There are many good companies that offer this type of service.   When deciding, obviously check online reviews and also understand the difference between custodial solo 401k and checkbook solo 401k.  Another major factor is...what do you want to invest in?  You can have a "solo 401k" at one of the major financial firms like Vanguard or Fidelity but they only allow you to invest in their portfolio of stocks, bonds and mutual funds.  If you're looking to take advantage of the tax benefits as a self employed individual AND invest in alternative assets be sure the company you go with also offers that ability.   

[Jeff Nash]

Have you already decided to surrender the annuity for its cash value and intend to self-direct?  If that is the case, you just need to get a plan set up that will allow you to do that and you can use checkbook control to invest in real estate or other alternatives.  

[Patrick Lombardo]

Have not thought about the cashout.   I figured It would cost less to roll it into a self directed 401 than get hit with a penalty for pulling.   But something to definitely consider

But the purpose of the post is for actual user feedback of institutions others are using that they recommend.   

[Jeff Nash]

If you are out of surrender you need to assess your investment objectives in light of your risk tolerance and see if the annuity is something that you should keep or not. You just need to weigh the alternatives and evaluate the potential risk/return.  Some older annuities are not competitive and can be replaced (1035 exchange for more competitive annuities) or surrendered to invest in other asset classes such as real estate.  

Sense Financial who @Brett Synicky represents is a plan provider and very reputable.  As he noted, if you call some of the mainstream custodians they will say they allow for self-direction but they mean that in the literal sense of doing what you want with the securities and investment options on their platforms, which are traditional investments like stocks, bonds, ETFs, etc.  When a solo 401k is involved, you also do not need to use a SD custodian either (ie - checkbook control) which otherwise would be more costly.  For SD IRAs custodians are required.  

[Patrick Lombardo]

Quote from @Jeff Nash:

Have you already decided to surrender the annuity for its cash value and intend to self-direct?  If that is the case, you just need to get a plan set up that will allow you to do that and you can use checkbook control to invest in real estate or other alternatives.  

Spoke to them about out, my thought process, and I could be completely wrong, is that surrendering for cash = tax penalty.   Rolling into a sd 401k which allows me checkbook access and to invest in whatever I want, not with big name banks, would be less of a hit.   is that correct or incorrect?  

[Jeff Nash]

What I meant by surrendering is taking your funds out of the annuity to be used for some other investment.  An annuity is a contract and depending on the type and company you used it has a standard term.  Each year during the annuity contract period if you decide to surrender the annuity you stand to give up and lose a certain amount.  This is a surrender charge.  Once you exceed the term you are “out of surrender” and can take the money and do as you please, annuitize, or continue accumulating based on the type of annuity you have (fixed, fixed index, variable).  You just need to verify if you are out of surrender or not and then determine if staying in the annuity is what you think is best for you based on your risk tolerance, investment objective, and time horizon.  If you want to stay with the annuity then you would need other sources of investable capital to self-direct. This could come through contributions or perhaps rollovers as applicable.