Directing Your Solo 401k Plan as Trustee

The Solo 401k Plan is a retirement account that meets all the requirements in Section 401 of the Internal Revenue Code. As a qualified plan, the Solo 401k Plan does not have special restrictions on who can serve as plan trustee. This flexibility allows the participant to serve as trustee over the plan.

Solo 401k Rules state that all plan assets must be held in a trust, and a trustee must be designated to hold the assets. The trustee is responsible for the “activities of the trust and its assets,” according to the IRS. This may include directing investments, filing a 5500 EZ if assets reach $250,000 and above, and processing contributions.

Advantages of Solo 401k Plan

Because the plan does not require the hiring of a third party (e.g. bank or trust company) to serve as trustee, the participant can serve in this role. This results in several advantages:

• Reduced cost

The owner as trustee gives a significant cost benefit. Third-party custodian fees are eliminated because custodian consent is not required for investment transactions.

• Eliminated delays

Without the need for custodian consent, the trustee can made investment decisions and respond to opportunities quickly. Delays are eliminated, and investing can be done in real-time.

• Simplified process

The Solo 401k plan is simple to operate. Because the participant can serve as employee, employer, administrator and trustee of the plan, the process of directing the plan is simplified. The trustee can make investments with the simplicity and ease of writing a check.

• Banking control

The trustee can choose the bank that will hold the account. A checking account is made in the name of the trust; it is a separate entity from the owner. This account becomes the vehicle to make investments and direct the funds with checkbook control.

• Self-directed investments

The self-directed Solo 401k Plan from Sense Financial allows the participant to take full advantage of the investment capabilities of the plan. The trustee can direct the funds into almost every investment class, from real estate to private businesses. This virtually unlimited capability allows the account to grow and be diversified under the direction of the trustee.

Serving as trustee gives control and unlimited potential to the Solo 401k plan participant. As trustee, the participant can direct and invest retirement savings for maximum growth.