To the Men and Women Who Want to
Quit Working One Day: The Solo 401k Plan

How it all works

Congratulations on the best decision you've made so far this year- your Solo 401k Plan.


What's  next?


Let's get started........


First we need to complete your Solo 401k plan documents- these are the official papers establishing the plan itself, the specific plan features and how the plan will operate.Also included is a Trust Agreement which outlines your responsiblilties as the Trustee.


In preparing the documents we'll build in the greatest flexibility so that you can take advantage of all of the tax, investment and cash flow opportunities that may arise. For starters---


1. We'll add the ability to take out loans against your account balance.

2. We'll add the financial hardship feature that will allow you to take out some of your plan funds if you should run into financial difficulty.

3. We'll eliminate any eligibility requirements for you

4. We'll vest your accounts at 100% immediately and

5. We'll add the Roth contribution source so you can choose tax free or tax deferred benefits.

With the documents completed, signed and bound, you'll need to consider how much you want to contribute to the plan.

A Solo 401k plan consists of two components:- Salary Contributions (either Pretax or Roth )and  Profit Sharing Contributions.

Depending on your company's organizational structure, we have a contribution worksheet to use to help you determine the contributions you need to make to meet your financial goals for the year.


Sole proprietors and partners should download the 2018 contribution worksheet.

The 2018 Contribution Worksheet


For salary Pre-Tax deferrals or Roth deferrals you will need to complete a Salary Deferral Form before you earn any income from which you can make any contributions.


Once you've decided on your contribution amounts, we can move on to investing those contributions. Please remember that you will need to set up a main account for the plan with separate accounts for each participant in the plan.


Also, since it is required that Roth contributions be accounted for separately, if you will be making Roth contributions, most of the mutual fund and  investment firms require the you set up a separate Roth account under the plan.


If you want to invest in stocks, bonds or mutual funds you like, accounts  can be set up with E-trade, Ameritrade, Charles Schwab  or any of the discount brokerage firms.


If you want mutual funds, accounts can be set up at AIM, American Funds, Vanguard, T.Rowe Price, even Fidelity.


And if you are investing in gold, land, buildings, insurance, or an LLC company, we'll help you with those accounts as well.


All of the investment firms will require a copy of the Resolution establishing the Solo 401k plan and copies of the whole document or the Trust agreement as well.


Whatever the investment firms want, just be aware that you’ll need copies of the plan's documents. We'll help by providing you with an electronic copy that you can print depending upon the requirements of the investment firm.


After you are set up with your investment accounts, we will need copies of any transaction statements to prepare the financial statements for the plan. Or, if you prefer, just send us a copy of your statements.


Annually, we will send you a questionnaire on your investment and contribution activity for the year. We'll use this information to complete your annual financial statement, and your plan's tax return (if required) .


Then we will provide you with a Statement of Assets and Liabilities and an Income and Expense Statement establishing the official "Net Assets Available for Benefits".


As you have until the date your company's income taxes are due to make the profit sharing contributions, often we will not record the contribution until you file your taxes and make the contribution.


And when you assets exceed $250,000 we will prepare the Form 5500EZ for you to submit the signed copy to the IRS.


If there are any new Dept. of Labor or IRS regulations, we 'll tell you what, where, when, and how, you and your plan are affected. If required by the legislation, we'll update your documents and provide you with any new amendments to update your document binder.



We've covered the basics of how it all works. Naturally, you'll have questions and we'll have answers. If you want to take out a loan or a distribution, we'll prepare and process the paperwork. Then we'll keep track of any payments and prepare any 1099-R's that are needed.


We are not like the big mutual fund or investment firms where you have to dial into their automated phone answering systems, try and understand the options they give you and end up leaving a voice mail that you hope someone will understand and maybe, just maybe call you back.


Call us -- you'll talk to a real live person. It's a refreshing change.



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