Solo 401k Process (Flowchart)
This diagram explains the step-by-step process of how one can setup and administer truly self-directed Solo 401k plan.
First, you need to have legitimate self-employment activity or business in place. The business will act as the sponsor of the plan.
Second, the plan sponsor will “adopt” a Qualified Plan (Solo 401k). You will use services of a company like us to draft IRS-approved plan documents, assist with funding and the administration of it.
As part of the plan a Solo 401k Trust is created. The trust is the vehicle used to hold assets of the plan. It will have it’s own tax ID number (EIN) and unique name.
Account holder (you) are typically designated as the plan trustee (you don’t need a TPA), which gives you total control over your plan assets. There is no ‘middle man’.
As the trustee of the plan you go to any financial institution of your choice (a bank, credit union, brokerage firm such as Schwab of Fidelity) and open non-custodial account for a trust.
You request a direct rollover from your Traditional IRA or former employer 401k using Rollover form we provide and in few days receive a check payable to (for example) ABC Solo 401k Plan FBO John Doe.
You deposit this check into newly established bank account for the Solo 401k Trust.
Now that your plan is funded you can make investments as simple as writing a check. You take the title to investments (real estate, trust deeds, etc.) in the name of the trust and as trustee sign all the documents. No custodian or any third party is involved, you are in total control. All of the income from the investments owned by your 401k will be going back to the account and all of the expenses directly related to the investments of the 401k paid by you from the account by using a checkbook or debit card.