There are many types of retirement plans, but many have restrictions on who acts as the trustee, so financial transactions are harder to keep track of. In many cases related to creating a 401k plan for companies, they use the LLC structure of business 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 transactions. You will be the person who approves everything for the account. Solo 401k checkbook control is one that self employed people or small business owners without a full-time staff can use.
Benefits of Solo 401k Checkbook Control Plan
The benefits for 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 as well as you will be responsible for knowing what money is in your account. There is also greater access to this account if it is needed for an emergency.
Drawbacks to the Solo 401k Plan
There honestly is not a large drawback to this type of plan. It carries less risk than many other types of accounts. This type of account needs only be reported once a year with a Form 5500-EZ when the assets in the account exceed $250,000. This form is very simple to compete and can be filed by an accountant for very little. 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.
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.