Setting Up Solo 401k

[Josh Rich]

Today I'm working on taxes and finalizing my Solo 401k set up, yes tons of fun...not my favorite way to spend a sunny 75 degree Saturday in San Diego!

That said, I need some guidance on next steps.

Step 1) Have had sole propriatorship for a couple of years (unprofitable)

Step 2) Applied for and received my Tax EIN

Step 3) Gave self-employment info to foxnfox.com's Bruce Fox (great guy, most affordable) who processed the paperwork, and sent me a binder of legalise; this is for a solo 401k only, they do not act as custodians, or admin

Step 4) Acting as custodian, I will need to set up a bank account somewhere (any recommendations on which bank is best?); bank account will be exclusively for Solo 401K. (Will I need a bookkeeper if all transactions are tracked in/out of this bank account?)

Step 5) Roll over my previous employer's IRA and my wife's IRA (is that allowed since she and I are the only 2 employees?) into this new bank account (Hopefully the bank will help me do this?)

Step 6) Can I simply start investing in approved assets/transactions with checkbook control? (Mortgage Notes, and Turn Key SFR's)

Step 7) Can depreciation from properties be accounted on the standard schedule (straight-line, or accelerated)?

For all tax experts, accountants or attorneys, am I missing any steps? Also, I thank you all in advance for answering my "Bolded Questions".

[Dmitriy Fomichenko]

@Josh Rich

The bank account for the Solo 401k can be set up at any bank, however, it must be established following proper procedure, we found that most bankers are not educated enough to do it correctly that is why we have relationship with couple people that are trained and know how to do it properly. If you use a bookkeeper or not is up to you, but yes, you have to account for every single transaction. This is quite simple to do with the help of numerous accounting software available (many free) or even excel spreadsheet.

Your wife would be allowed to have an account under Solo 401k is she is also participating/working in the business. In which case she can have an account under the plan, but you can't just lump all together, you need to account for those funds separately - therefore you will need a separate bank account.

As soon as your account is funded, you can start investing out of your Solo 401k checking account.

Please consult a tax professional regarding an tax consequences when using 401k for investing.