Among the retirement plans available in the market, keeping track of the financial transactions is a challenge, primarily because of the involvement of different trustees. In many cases related to creating a 401k plan for companies, they use the LLC business structure or have to have a custodian (which is usually the bank). With a custodian, you must seek their approval before you invest in anything, which means you do not have total control of the account. With this type of account, you become the trustee, which means you control all the transactions. You will be the person who approves everything for the account. Solo 401k checkbook control is a specific feature designed for self employed people or owner-only businesses.
The benefits of a Solo 401k checkbook control plan are fairly straight forward. As the person who controls the investments for your account, you can better manage and invest your money in a way that suits you. There are no third parties introduced so there are no fees associated with having someone else handle your money either. The process for keeping records is very simple, and you will be responsible for knowing what money is in your account. Further, you receive instant access to handle any emergency cases or time-sensitive investments.
Drawbacks to the Solo 401k Plan
When it comes to drawbacks, it’s hard to come by one. It carries lesser risk than other types of accounts. This type of account needs only be reported once a year with a Form 5500-EZ, and that too when the assets in the account exceed $250,000. This form is very simple to complete and can be filed by any accountant for nominal charges. The only thing you must worry about is making sure you do not do any prohibited transactions. This is the same standard for any type of account where the trustee is making all the decisions. Keeping in compliance with the rules and laws regarding these types of accounts is solely up to you.
The only drawback that one could think of is its availability to self-employed professionals and owner-only businesses.
Conclusion
Solo 401k checkbook control is a very important aspect of what makes this type of account so beneficial. You will not need to change the structure of your business or type of employment for this account and you have control of it. It is quick, easy, and not difficult to manage.