Posted almost 9 years ago

Giving Control Back to Individual 401k Participants

Solo 401k

The Individual 401k plan is a qualified retirement savings plan for the self-employed and small business owner.  As a 401k plan, it has the same rules as a traditional 401k.  However, because the plan is simplified for self-employed and small business owners, it affords additional advantages to its participants. 

Individual 401k rules do not contain special requirements for who can serve as plan trustee.  All assets are required to be held in a trust, with a trustee designated to be responsible for the safekeeping of plan assets.  It is not required that the trustee be separate from the participant.  This allows the Individual 401k plan participant to be designated as trustee of the plan. 


The owner-as-trustee function gives several advantages:


Costs are reduced

Custodian consent is not required for transactions involving the Individual 401k plan.  This eliminates the need for a third-party custodian and the fees they require.  This results in a significant cost benefit to the participant. 

Delays are eliminated

The trustee can make decisions without waiting for the approval and consent of a custodian.  This means decisions can be made quickly, and opportunities can be acted on without additional delays. 


Simplicity of operation

The Individual 401k plan participant can function as the plan’s trustee, administrator, employer and employee.  This simplifies the operation and direction of the plan. 


Control over banking

The trustee chooses the bank in which to place the account.  A checking account is made in the name of the trust; it is a separate entity from the owner.  This account will holds the funds and serves as the vehicle to direct and make investments. 


Control over investments

The Individual 401k plan from Sense Financial is a truly self-directed plan, giving participants the ability to invest funds into almost every investment class, from real estate to precious metals.  This virtually unlimited investment capability gives control to the trustee, allowing for greater growth and diversification.


The Individual 401k participant can act as trustee over the plan.  This gives owners more control and direction over their retirement savings.