Self-Directed 401k Charles Schwab

 

In this blog posting we teach you how to open self-directed 401k with checkbook control at Charles Schwab.  

The key to the Schwab self-directed 401k with checkbook control is to engage the services of a solo 401k provider whose solo 401k plan documents allow for the purchase of alternative investments like real estate, precious metals, tax liens, commodities, promissory notes, private company shares and equities, to name a few.

Next, because as the trustee of the you will be performing the trustee, fiduciary and administrative functions, a self-directed 401k through Charles Schwab brokerage account platform results in Charles Schwab only providing brokerage account services. In other words, Charles Schwab will not be involved in the administration of your Solo 401k plan since they are not the Solo 401k provider.  

When you use the Solo 401k plan documents of a solo 401k provider, first confirm that their solo 401k plan allows for a solo 401k loan. This is especially important if you are looking to use solo 401k funds for the purchase of your personal house.  Through a Solo 401k loan, you can borrow up to 50% of your Solo 401k balance not exceed to $50,000 for a period of 15 years if the proceeds are used towards the purchase of a primary residence for the solo 401k trustee or his or her beneficiary.

The Charles Schwab self-directed 401k with checkbook control and Solo 401k loan option works like this:

 

Step 1: Engage the services of a solo 401k provider whose allow for investing in alternative investments and includes solo 401k loan option.

 

Step 2: After adopting the plan documents (i.e., executing the Solo 401k trust adoption agreement), have the Solo 401k provider provide you with Charles Schwab’s specific brokerage account forms that allow for checkbook option and cover letter.  

 

Step 3:  Submit the newly adopted Solo 401k adoption agreement, the completed Schwab brokerage account forms and cover letter to the applicable Charles Schwab regional back office.

 

Step 4: Once your Charles Schwab brokerage account for your new self-directed 401k is opened, you will receive a checkbook in the mail which will be used for placing your alternative investments such as real estate and processing Solo 401k loan.  

Step 5: If you decide to exercise your solo 401k loan option, contact your Solo 401k provider, not Charles Schwab, and have them prepare the required Solo 401k loan documents. Do not process a Solo 401k loan without first having the solo 401k loan documents prepared as it will be deemed a taxable .

Important Closing Words

It is important to stress that under the self-directed 401k with checkbook control arrangement Charles Schwab’s only involvement is to provide brokerage account services, not administrative, fiduciary or trustee Solo 401k support; nor will Charles Schwab be responsible for administering your Solo 401k loan, or safekeeping the solo 401k plan’s alternative investment purchase documents (e.g., the deed in the case of a ). Instead, these functions are your responsibility.

To learn more about how to invest your solo 401k plan in real estate visit: 

http://www.mysolo401k.net or call

800-489-7571