Equity Trust vs. Quest IRA vs. Solo 401K who should I go with??

[Mark Porter]

I have 77k to fund one these self directed IRA but now I'm trying to decide who to go with. Seems like Solo 401K give you the most control of your money, please help. Thanks!!

[Brian Eastman]

@Mark Porter

It really depends on what you intend to do with the funds.

If you will be making a single, more static investment that does not involve a lot of transactions, an IRA custodian will be simple. I'd avoid the two you mention and find a company that charges fee for service and not per the asset value of the account, however.

If you will be investing in assets that are time sensitive, involve a lot of transactions, or will be using leverage like a mortgage, then a Solo 401(k) - assuming you qualify as self employed - will be a much more flexible, and powerful tool. If you do not qualify for the SoloK, a checkbook IRA LLC has similar advantages.

Chat with a custodian or two and a few providers of checkbook IRA and Solo 401k plans. Different types of businesses provide each type of plan service. It will become clear to you which business model will be the better fit for your needs.

[Mark Porter]

Thanks Brian ! I think I will be going with Solo401K for the flexibility that it offers, I don't want to wait a week for a check to be issued when I run across a deal. 

[Rick Pozos]

I know that Quest IRA will fund within 2 to 3 business days. They are even local to you. If you really think about it, you should get title insurance on anything that you buy to make sure that the seller is the legal seller of the property or note or whatever. This will take a few days anyway. I have never needed money so bad that I need it today. If you are going to make an offer, you can always give your account statement as proof of funds and let them know you will have earnest money shortly.

[Rajeev Kotyan]

@Mark Porter: Making account choice decisions solely based on how fast things get processed is not generally a good approach. There are some advantages to going with a Solo(k) as mentioned by Brian, but there are also operational and administrative items, as well as estate planning impact when having a Solo(k). Well you have similar considerations for IRA and Checkbook LLC within that. As Rick mentions, "I have never needed money so bad that I need it today". Finally you do have to keep in mind that when you have received the checkbook you are also responsible for preventing any prohibited transactions that may invalidate your account, which means you would have to learn the laws and regulations (not a bad idea).

[Dmitriy Fomichenko]

Originally posted by @Rajeev Kotyan:

@Mark Porter: Making account choice decisions solely based on how fast things get processed is not generally a good approach. There are some advantages to going with a Solo(k) as mentioned by Brian, but there are also operational and administrative items, as well as estate planning impact when having a Solo(k). Well you have similar considerations for IRA and Checkbook LLC within that. As Rick mentions, "I have never needed money so bad that I need it today". Finally you do have to keep in mind that when you have received the checkbook you are also responsible for preventing any prohibited transactions that may invalidate your account, which means you would have to learn the laws and regulations (not a bad idea).

Mark, being able to access your retirement funds when needed in a timely manner I think is very important factor when making a decision like this, although I agree with you that if this is the only factor considered - it would not be correct.

Not sure what you mean by "estate planning impart when having a Solo(k)", can you elaborate?

And finally, regardless whether you have checkbook control or not - you as the account holder is responsible for any prohibited transaction. Having a custodian does not remove that responsibility from you. So you need to know the rules period if you have a self-directed account. 

[Rajeev Kotyan]

@Dmitriy Fomichenko: Estate planning: Solo(k) is governed under ERISA (Federal) while IRAs come under the state laws, so as an example lack of beneficiary designation (not that I am advocating that), can have different impacts. For a solo(k) plan the plan fiduciary is generally the plan participant, and any if no care is taken to name a successor plan fiduciary prior to death will have to go through the federal estate probate (please excuse me if I am using the wrong words), to identify a replacement fiduciary, even if it just the spouse, and that is so that solo(k) plan participant account may be transferred to the named beneficiary on the plan account (assuming beneficiary is named). Assuming beneficiary is named on IRA the steps are limited. Solo(k) plans under ERISA by challenged for beneficiary disputes, and the plan fiduciary has to spend time and resources before the plan participant accounts can be distributed. These are only naming a few aspects, all of which are solvable and must be considered as part of the estate planning of the solo(k) owner.

I agree with your statement "you need to know the rules period", having a custodian generally (not always) helps prevent some of the obvious errors.

Please note that I am not advocating one type of account is better than the other, just that each type of account has to be carefully assessed and managed from all aspects.

[Justin Windham]

Originally posted by @Mark Porter:

Thanks Brian ! I think I will be going with Solo401K for the flexibility that it offers, I don't want to wait a week for a check to be issued when I run across a deal. 

Yes, most folks who are Solo 401k eligible choose this route over an IRA. Much higher contribution limits, no custodial requirement, built in checkbook control without an LLC, built in Roth component, spousal participation, participant loan feature, exemption from UDFI tax, etc are some of the additional benefits Solo 401k participants can enjoy.

[Mark Porter]

Thanks to all, you offer a wealth of knowledge.  That's good advice @Rick Pozos

[Bob Malecki]

Does anyone have any further opinions on Quest for setting up a solo 401k? There seems to be a lot of companies offering soloK products with varying fees, I'm looking for a knowledgeable provider who has reasonable fees, thanks. 

[George Blower]

@Bob Malecki

Are you looking for the custodian to hold your solo 401k investments (e.g., real estate purchase documents)?

There are generally two types of self-directed solo 401k plan providers. 

First type: The solo 401k provider serves as both the solo 401k plan document provider and as the custodian of the cash, and the assets (e.g. real estate, notes, and tax liens). 

Second type: The solo 401k provider provides the solo 401k plan documents, but you get to choose the bank where the solo 401k funds will be held at, and you safe keep the solo 401k investment documents (e.g. real estate, notes, and tax liens).

[Brian Eastman]

@Bob Malecki

Generally speaking, the Solo 401(k) programs offered by custodial institutions are really bare bones.  The institution provides minimal record keeping and reporting services to document plan activities.  They generally do not offer any kind of guidance for your use of the plan and compliance with IRS guidelines, and will refer you to outside counsel for that type of help.

Specialized Solo 401(k) providers, which are often referred to as plan facilitators, will implement the Solo 401(k) plan & trust format for you and place you in full control of the plan with no need for a third party administrator or custodian.  This format provides you with direct checkbook control of the plan.  In this realm there are "document mills" and professional advisory firms.  With the latter, you can expect meaningful guidance with respect to your usage of the plan.

Ultimately, that last piece is the critical component.  Anybody can produce a set of documents.  The real value as you utilize your plan is knowing that you are pursuing the correct strategies in accordance with IRS guidelines so that you can invest with confidence.  

[Justin Windham]

@Bob Malecki

Many folks seem to enjoy the increased control and generally reduced costs that come with a self-trusteed Solo 401k. These are the plans that offer checkbook control, no asset-based fees, no transaction fees, etc.

Most custodians such as Quest, on the other hand, have various fees for holding the 401k funds, making transactions, terminating the plan, etc. They also tend to be slower to respond to requests for transactions (vs being able to write a check yourself) and may deny legal transactions based on company policy.

[Stephen N.]

i did solo401k with Sun Trust. very satisfied. in my opinion solo401k is the best way to do if you have the ability to utilize it

[Bob Malecki]

@Stephen N. are you referring to Sunwest Trust the custodian or Sun Trust the Bank?

[Stephen N.]

sorry @Bob Malecki, Sunwest Trust.    I paid them $500 and they set up all the paperwork for my solo 401k

[Bob Malecki]

Well that makes my life easy since my Roth accounts are with Sunwest, thanks for the heads up!

[Justin Windham]

@Bob Malecki @Stephen N.

I like Sunwest Trust too. I do believe their annual fee is $200 for the 401k, though.

[George Blower]

@Bob Malecki

Note that Roth IRA funds cannot be transferred to a Roth solo 401k plan.

CLICK HERE to read about this restriction.

[Bob Malecki]

Well Sunwest at $200/yr. is the best I've seen. most others are around $300. I called them this morning, immediately transferred to one of their acct managers who answered my questions, sent me the application via email, I filled it out and sent back to him. All in less than a 2 hour period. 

Fyi I called Quest this morning, their 401K expert is out of office all week, go transferred to a 'marketing manager' who said I need to make an appointment to discuss with her so we set up Friday to discuss. Guess I'll be cancelling that phone call. 

[Justin Windham]

@Bob Malecki

I definitely recommend Sunwest Trust over most custodians for a Solo 401k. $200 annually is a pretty good rate, but the fees from Solo 401k facilitators with full support start at $100 per year.

[Scott Carson]

Call Rebecca Miller at Quest IRA....she'll give you a rundown on why you would or would not want a solo 401k.

[Bob Malecki]

Scott, I tried yesterday, got transferred across 3 persons and was told that I have to set up an appointment to go over my options. You would think that someone calling as a response to their Seattle event on Monday would be considered a warm lead and provided immediate attention. 

I called Sunwest and they got me going in less than 2 hours with the info I needed and the forms to get started. Easy peasy. 

[Joe Schultz]

I have a SEP self directed IRA, who would you recommend to be the custodian.

I use it for investing and holding rental property. I may do more with it later but this is what I have been doing.
Thank you, Joe