Solo 401k Plan Owners: The Roles and Responsibilities
Many people are not aware of the facts that Solo 401k plan owners can wear multiple hats. For a Solo 401k plan, often the plan owner is both the employer and the employee of the business. Hence, the contribution limit is the combination of both salary deferral and profit sharing contributions. The plan owner is also acting as the plan trustee and administrator of the plan. This fact gives them the ability to self direct their investments. Solo 401k plan owners can also have access to a lot of flexible options, such as the loan feature or the checkbook control.
These benefits, however, also come with certain responsibilities. Solo 401k plan owners are responsible to keep up with the maintenance of the plan. Here are what plan owners need to know about their roles and responsibilities.
Solo 401k Plan Owners : The Roles and Responsibilities
Usually, Solo 401k plan owners wear multiple hats: Plan Participant, Plan Trustee, and Employer. As a plan trustee, you are responsible for signing all investment-related documents. Keep in mind that you are only acting on behalf of the plan. All investments, such as properties, should be titled in the name of your Solo401k Trust. The earnings and expenses should only go through the plan’s account instead of your personal account. As the plan trustee, you are also required to file tax return for the plan if needed.