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Updated 6 months ago on . Most recent reply

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34
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Zehua Zhou
6
Votes |
34
Posts

Fidelity won't open the business account for my LLC

Zehua Zhou
Posted

My LLC is 100% owned by my 401k. So it is a disregarded entity where the tax should flow to my 401k.

When I try to open a business account with Fidelity, I filled their form to explain that the owner is my 401k and the manager is me. They declined my application after a week of review, citing that "Non-retirement accounts cannot hold retirement funds".

Can you please let me know your suggestion here? My 401k is set up with uDirectIRA. If I don't setup the LLC and don't setup the bank account, then it will be a lot slower because every time when I sign for the offer or for some expense, I have to ask them to sign. Also uDirectIRA's trust account only pays 0.1% interest, but Fidelity pays nearly 5% interest.

Most Popular Reply

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17,848
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Dmitriy Fomichenko
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
6,240
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17,848
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Dmitriy Fomichenko
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
Replied

@Zehua Zhou,

You have a flawed setup. A 401k does not require a custodian or a third-party administrator (TPA), and you don't need an LLC to have checkbook control for your 401k. You just need the right provider to set it up better. We set Solo 401k plans for our clients in the form of a trust instead of using a custodian. The trust will have its own EIN, and as a trustee, you control it. This way, you will eliminate the custodian completely with its fees, red tape, etc. The end result - are you truly in the driver's seat of your 401k!

As trustee of the plan, you can open a bank account in just a few hours at one of our preferred banks. If you need a brokerage account at Fidelity, you open Fidelity's Investment-Only Non-Prototype Retirement account for the 401k; there is no need for the LLC. Your structure is complex and not cost-effective. Try to always remember and apply the KISS principle (keep it simple).

  • Dmitriy Fomichenko
  • (949) 228-9393
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Sense Financial Services LLC
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