Cookie-Cutter Solo 401k plan from discount broker?

[Ed Brownstein]

It appears that some of the brokers have cookie-cutter Solo 401k plan agreements for their customers.  Reading through the agreements the plans allow for Real Estate & loans.  I know mysolo401k.com allows their plans to be housed at Fidelity, Schwab. & TD Ameritrade.

Could it be as simple as setting up a plan and making withdrawals for RE activity?

Sample plan agreement:   https://www.dropbox.com/s/s3bl19e7847g9zy/QRP%20Pl...

[Dmitriy Fomichenko]

@Ed Brownstein 

TD Ameritrade Individual 401(k) Profit Sharing Plan is NOT a self-directed plan. You cannot invest your plan assets in anything other than what is offered by TD Ameritrade.

This type’s of Plans are usually managed by the Custodian, and the investments options are limited in the Basic Plan Document:

“…limit the available investments for Participants’ individual direction to certain specified investment options (including, but not limited to, certain mutual funds, investment contracts, deposit account and group trusts” (see section 7.22 B)

While this plan can be trustee managed, the plan document again limits investments only in the Fund:

“The responsibilities of the Trustee shall be limited to the following duties: To receive Plan contributions and to hold, invest, and reinvest the portion of the Fund for which it serves as Trustee, as authorized by the Employer or its designee, without distinction between principal and interest, provided, however, that nothing in the Plan shall require the Trustee to maintain physical custody of stock certificates representing assets within the Fund” (see section 8.02 A.1)

You can find out more info about TD Ameritrade 401k plan here:

https://www.tdameritrade401kplan.com/

Here is a link to the Investment Fund Summary Table showing available investment options if you use TD Ameritrade to set up your Plan:

https://www.fascore.com/PDF/td_ameritrade/Investment_Fund_Summary_Table.pdf

Also, in addition to the Basic Plan Document you need to review Summary Plan Description as well as Adoption Agreement, which is where certain features of the plan will be added or removed. If you see some language in the plan document about real property it doesn’t mean that you can use your plan for real estate investments. This is not something that you will want to play around on your own – it’s your entire retirement account that is on the line here. Work with the expert.

If you wish to invest your retirement funds in real estate and other non-traditional investments, then you need truly self-directed plan without investment limitations other than those imposed by the IRS.

Hope this helps.