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Updated 3 months ago, 09/05/2024
Checkbook 401K reviews
I am trying to decide on which company to use for a checkbook controlled solo 401K. I have read most of the discussions and cannot find a clear winner. I already have an Equity Trust account with an old Roth IRA but they do not offer checkbook control. I am rolling 401k over from a previous employer to fund the SD solo 401k. I am self employed with two other businesses so the checkbook option shouldn't be a problem.
I am looking at the following.
iRA123 or Safeguard, Sense Financial, Broad Financial, and IRA financial group.
If there are any better companies please let me know. I am reviewing them all (due diligence).
Thanks in advance.
James
i use sense financial. I'm very happy with them. I previously had a self directed IRA with Entrust and had numerous issues mostly related to the time it takes then to process requests, which can potentially cause you to lose out on deals.
@James Floyd
You can also setup an IRA LLC for the Roth IRA since it cannot be transferred to a solo 401k.
You don't have any employees in any of your businesses do you? All of the businesses you own come into play when your Solo 401k eligibility is being determined.
@James Floyd I use UDirect IRA Services out of California. I have been very happy with them and their services. The offer complete checkbook control on our (I have 2 partners) ROTH SDIRAs and Traditional SDIRAs. I am pretty sure they also offer the Solo 401K option.
If you look at the members 'tag lines' here you will see several that are in the 'Self Directed Business' too, who all seems very competent from their posting. The reason I went with UDirect is that I need one fairly quickly and they were recommended by a fellow member here. Good Luck.
Dan Dietz
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- Real Estate Broker
- North Richland Hills, TX
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#5 Coronavirus Conversation Contributor
- Real Estate Broker
- North Richland Hills, TX
I use Sense Financial for my Solo 401K, and their service and support is great.
Discount Solo 401K, Sense Financial, or My Solo 401K? Which one should I go with and WHY? I left me W2 at the end of May and want to roll my 401K into something that allows full, checkbook control. I have an LLC that owns 4 properties in Kansas, I own a rental and our primary residence in Colorado under our personal names, not the LLC.
I don't have any employees, my LLC is 50/50 with my wife. My concerns with selecting a servicer are the following: customer service, access to funds, access to education materials so I can learn how to stay away from prohibited transactions. My goal is to use the money to issue micro loans as well as to serve as down payments for newly acquired rental properties. Any and all information would be appreciated. I also want to make sure I can roll the money from my former employers plan directly to the new SD 401k. I do not want to handle any of the money during the transfer process. I heard that is a good way to make myself subject to taxation.
A true solo(k) should have 100% checkbook control. Many investors really like this type of account due to the many advantages it can provide. As you mentioned in your post about using education materials to stay away from prohibited transactions, that's a great plan and most institutions offer a variety of educational materials. I think it is best with a solo(k) to take it to the next level and work with a professional such as a CPA or your advisor, to ensure that all your transactions are proper and are not considered prohibited. A professional can also ensure that you perform the proper tax reporting and record keeping on the transactions. Your mention of using the solo(k) for down payments on real estate investments could end up being prohibited depending on the details and structure of the investments.
Often with a solo(k) the structure will be something like this, the financial institution will provide you with a 401(k) plan document and adoption agreement, you should be able to select certain plan defaults. Then you will set up a checking trust account for your new 401(k) plan. You then have complete checkbook control over that account to invest as you choose to.
Regarding the transfer, that will likely be up to your current 401(k) provider. Many will allow for a direct rollover where the funds are rolled directly to the new plan. Some providers do not like to do a direct rollover and instead do what is called an indirect rollover or a 60 day rollover. There are some rules around this transaction and if not done correctly could lead to taxation and penalties as you suggest. I would recommend you speak with both your current 401(k) provider and the new solo(k) provider to ensure both are willing and able to facilitate a direct rollover.
If you would like to connect, I would be happy to further assist you with any other questions you may have.
@Adrian N. what properties do you in in Kansas? Is it in Kansas City or some other town? Did you set up a KS LLC or a CO LLC?
A LLC that holds rental properties is not suitable as an employer for a Solo 401(k) plan. Rental income is passive investment earnings, not earned self-employment income. Speak to your CPA (not someone who wants to sell you a plan) to ensure you qualify for a Solo 401(k).
If not, a checkbook IRA LLC will accomplish the same goal of putting you directly in control of plan funds and able to lend or own rental property.
What you are looking for with a Solo 401(k) provider is guidance. Anybody can market a set of trust documents on the internet. As you speak with several firms, you will pretty quickly tell who is just selling something and who is asking the right questions and taking the time to ensure you are on the right path and primed for success.
@Alex Olson Not in KC. I'm in Salina. I have a Colorado LLC.
@Adrian N., if you want to " test drive" prospective custodians/ advisors before you buy, design questions based on your concerns and then call each one with questions based on those concerns.
Ask each one a tax question about a prohibited transaction. See if they are allowed to answer or if they refer you back to your advisor. When an opportunity arises to make a transaction you want to be able to access professional advice quickly.
@Adrian N., if you want to " test drive" prospective custodians/ advisors before you buy, design questions based on your concerns and then call each one with questions based on those concerns.
Ask each one a tax question about a prohibited transaction. See if they are allowed to answer or if they refer you back to your advisor. When an opportunity arises to make a transaction you want to be able to access professional advice quickly.
I agree with Todd which is why I ended up with Brian over at Safeguard Advisors. I retired from a corporate real estate gig at a Fortune 500 so I've dealt with many professionals through the years. Brian asked the right questions and articulated well thought out options to consider.
We're still in the process, so I'll report back when everything is completely up and running, but I'm impressed. I recommend him.
I know Brian will personally talk with you by phone and you can compare him with the others.
I have used Sense Financial for my Solo 401K and Roth and the process and support have been great. Dmitriy has been avail to help on different issues and I am glad to keep using Sense going forward.