Accountant · New York, NY · Member since 2009 · 24 posts · 4 votes
Hi,
I am looking to move IRA money into a Solo 401K with checkbook control. For now most of the funds will go into real estate partnersips but eventually I may move some into direct real estate.
Does anyone have any direct experience with mysolo401k.net? Their fees seem to be the most reasonable of all. $595 setup and $125 annual. Would be great to hear of people's experiences both positive and negative.
Lender · Baltimore, MD · Member since 2015 · 100 posts · 30 votes
8y
I used mysolo401K to set up my plan. I have been extremely impressed with them. They have been easy to work with and have always answered my questions promptly, provided ongoing service (after I set up the plan) and helped me to get an EIN for my trust. They walked me through what to tell the bank when setting up an account, etc. Based on my experience, I highly recommend them as the quality and level of service I have received has been excellent!
Property Manager · Moraga, CA · Member since 2012 · 27 posts · 2 votes
12y
Not sure on IRA management, but caution you to check with a CPA and Tax Attorney as this might be considered a "withdrawal" by the IRS which means penalties, if not handled correctly.
I am not an attorney or CPA, but when I was seeking to use my funds for a business investment (franchise purchase), I was instructed to use a self-directed 401k structure (I am the 401k manager) and then direct the funds to invest in a C-Corp that I own. This funded C-corp then is able to make investments and act as a broker as well. I can also make annual salary deferrals to the 401k as well as contributions. I know using a C-Corp for real estate investing is frowned upon by many since you can not take the personal deductions, but if your funds are in a retirement account, this was the only way I could find to utilize them with IRS approval.
I am told IRS is sensitive to distributions being held in LLC's since profits flow through to members on their tax returns - IRS might consider this an early withdrawal and consider fines.
Suggest professional advice so you do not have a hassle in the future and maybe lose your investment funds.
Accountant · New York, NY · Member since 2009 · 24 posts · 4 votes
12y
@Linda L.
I actually took the dive after speaking to the people (or should I say person at mysolo401k.net). So far it's been a very positive experience. They really seem to have things setup and ready to go and have solid existing relationships in place (such as places to open up an actual bank account and put you directly in touch with people at the bank who respond to you). Currently, my TD Ameritrade account is open under my Solo 401k Trust and the internal transfer should happen soon. Additionally, they seem to have a good degree of knowledge about the process (I can't speak to their knowledge of actually investing in assets or prohibitive transaction issues as I haven't asked and plan to conduct my own investigation if I am ever worried).
My only concern is that it almost seems to be one guy running the show (not true, there are 2 head people and 4 other people that handle operation and administration on the back-end), so I worry about "key man risk." I am still going to explore that but even if something happened, it is still an approved plan by the IRS, so there aren't any real reprucussions as far as I can see.
I would be happy to answer any further questions to you or anyone else.
Real Estate Investor · Visalia, CA · Member since 2014 · 12 posts · 7 votes
12y
Hello David,
While I have not worked with mysolo401k.net I did look at them a few years ago. I looked around quite a bit before I decided on working with Dmitriy Fomichenko at Sense Financial Services LLC(). They were very very hands on and that made the setup of the bylaws documentation, checkbook openning and transferring assets to it to use, very easy. I have my checkbook for my solo401k with Wells Fargo bank.
The nice thing about the solo401k is the ability to take a loan. Very hassle free and paper work is minimal. Bought some silver and gold in the solo401k, now looking for SFH for income. They also helped me with filing a distribution I made last year to offset some losses.
Totally recommend them, hope that helps.If you need more info on what I did just ask.
Real Estate Investor · Bonney Lake, WA · Member since 2012 · 54 posts · 14 votes
12y
Bylaws are required for the company adopting the 401k, which is required if you want to make distributions from the employer. The other requirement is to have an actual "Defined Contribution Trust" which is needed in order to establish the actual trust so that you can have the 401k. Trust documents must also include an adoption agreement stating that the company adopted the 401k plan and trust, which names the owner as the trustee of the trust, thereby giving them rights and privileges to deposit, withdraw, and transfer money within the trust's accounts.
The trust and plans we set up for investors are about 300 pages long, so there is ample documentation required to make it a truly self-directed account with checkbook control.
Monterey Park, CA · Member since 2012 · 56 posts · 3 votes
12y
@David S. Thank you for the input. So under your 401k, you have both a bank account and a brokerage account? So for bank account, any will do? and any particular reason to choose TD Ameritrade as the brokerage account?
Real Estate Investor · Visalia, CA · Member since 2014 · 12 posts · 7 votes
12y
Jeff Barnes is right.
For my solo 401k , I only have a checkbook account. I'm not interested in buying stocks with it so I don't need a brokerage account. I can buy stocks with my 403b at my job.
For me I had about 45k in losses on another investment which would give me back about 11k in tax refunds and put me into a small tax bracket. Knowing this would happen I choose to take a distribution and pay the taxes on the distribution at my lower rate. It was a one off kinda year.
Concord, CA · Member since 2012 · 3 posts · 2 votes
12y
My Solo 401k Financial offers a solo 401k that can be invested in alternative investments and it allows for solo 401k loans. The solo 401k funds can be held in a bank account or even in a brokerage account at Fidelity, TD Ameritrade, Schwab or Etrade. The checkbook option is included in the brokerage account feature, which works great when investing in physical real estate, gold, promissory notes, etc., and the solo 401k loan can be processed by wire or by writing a check. The brokerage account option is great for those that want to be able to do all under one umbrella (i.e., invest in real estate, stocks and mutual funds and process the solo 401k loan).
For my solo 401k , I only have a checkbook account. I'm not interested in buying stocks with it so I don't need a brokerage account. I can buy stocks with my 403b at my job.
For me I had about 45k in losses on another investment which would give me back about 11k in tax refunds and put me into a small tax bracket. Knowing this would happen I choose to take a distribution and pay the taxes on the distribution at my lower rate. It was a one off kinda year.
Jose, if you have access to your funds at the trustee, can you open a brokerage account in the name of your plan anywhere. Your role as trustee allows you to invest the funds as you see fit. That could be through checking account, brokerage account, etc. You're shouldn't be limited to one option. You may like the liquid cash options at one bank vs. another and choose to have two checking accounts for the Solo(k).
San Antonio, TX · Member since 2016 · 240 posts · 163 votes
9y
@Mark Nolan Could a person have checkbook control as well as a brokerage account? Can funds be invested in, say mutual funds, and then sold when one wants the liquidity to buy real estate?
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
9y
@Betty Cruz, if you have a truly self-directed Solo 401k plan then the answer is YES. After your plan is setup you will have the ability to open a Fidelity Non-prototype retirement account, which can come with the check-writing ability. So you can use this account exactly as you described.
Yes, that is one of the great advantages of a Solo 401k plan with checkbook control. Some clients will have both checking and brokerage accounts so that can accomplish what you described. Others will open a brokerage account with checkwriting features so this can all be done from one account.
As long as the funds are properly transferred to an IRS-approved 401k, it will not be a taxable distribution. You are, of course, correct in recommending appropriate professional help whenever in doubt. The Solo 401k is a much simpler structure than the one you went with, however.
USAA is a great bank. I lived in San Antonio for 10 years and have dealt with them quite a bit. We recently helped one of our Texas clients get setup there, so yes, that should be an option for you as well.
San Antonio, TX · Member since 2016 · 240 posts · 163 votes
9y
@Mark Nolan Cute. I've read your materials and they are very informative. I see the advantage/need to have both a checking account and brokerage account primarily for the bank card and cashiers checks, which the brokerage account doesn't provide. Is that a correct line of thinking?
@David S. Three years have gone by...still happy with My Solo ??
Hi Eric,
Extremely happy. To give you the rundown of what I have done within my Solo 401k
* I have a brokerage account with Ameritrade (normal stocks, ETF, etc.). They made it very easy at MySolo401k to setup.
* I have a Wells Fargo bank account (business/trust account, no fees). Also due to MySolo401k relationshuip (no fees, especially). I am part of a syndicate of lenders where loans are funded daily and payments are received with regularity.
* I invest in real estate partnerships - money is wired (or I setup a bill pay) out of the Wells Fargo account. I receive distribution checks and exit proceeds and deposit those right into the checking account.
All of the above stays under the umbrella of the Solo 401k. When I hit 250k in assets I think there is an additional tax filing requirement. MySolo401k seems ready to handle that as they send out reminders.
I have never had any difficulty contacting someone there. I receive answers and fairly prompt service if needed. Mark and his team are top notch.
Feel free to PM me, and I am happy to discuss further if you need.
Residential Investor · Allentown, PA · Member since 2012 · 95 posts · 29 votes
8y
That's good to know. Some of the competitors charge crazy fees. Was it necessary to set up a seperate entity (LLC, C-corp, etc), or is everything done within the trust? I'm not sure if I understand the reasoning behind the brokerage account?