Starting a Solo 401k Account and Holding the Funds at Betterment

BACKGROUND & QUESTIONS:

I have a question about starting a Solo 401k. I really like the idea of self-directing my 401k assets, while also having the ability to take a loan from the balance. I am in the process of starting a business, but there will probably not be any significant profits for the first couple of years. I know that I can roll-in prior employer 401k funds, but can I transfer in IRA funds (I know that I have not been able to transfer an IRA into a traditional 401k plan with my employer)? I still have a traditional W-2 job, and I was wondering if I could use income from that job, contribute to an IRA, and then immediately roll that into the Solo 401k?

Also, I would like to be able to have a place to "park" funds while they are not being invested elsewhere. I really like Betterment.com for some of my other funds. Is it possible to set up an account with a brokerage like Betterment.com and have the funds deposited there until I am ready to use them elsewhere?

ANSWERS:

1. Yes even if you are participating in your current employer's 401k, you can open a solo 401k if you are performing at minimum part-time self-employment activity.

2. Yes you can roll Traditional IRA funds to the solo 401k plan and the solo 401k provider would complete the necessary transfer forms as part of the setup process.

3. Provided you qualify to make tax-deductible IRA contributions, yes you can make Traditional IRA contributions and then transfer those to the solo 401k plan. Whether or not your IRA contributions are deductible depends on your modified earned income since you also contribute to your day-time employer 401k plan.Click hereto see the applicable AGI chart to determine if your IRA contributions are tax deductible.

4. Yes you can open the brokerage account for the solo 401k at Betterment.com since the solo 401k would be opened with a self-directed solo 401k provider that would allow you to choose the financial institution to hold the solo 401k funds. Since a solo 401k is a retirement trust account, you will need to open a brokerage account with Betterment.using their "Trust" account application, which the solo 401k provider can assist in filling out, and submit the "Trust Agreement" for the solo 401k retirement trust to them.

To learn more about he solo 401k rules, VISIT HERE.