Solo 401k Term, Conditions & Agreement For Services

SENSE FINANCIAL SERVICES, LLC (“SFS”) and the SFS client (“Client”) agree as follows:

Upon acceptance of this Agreement, payment of the Establishment Fee and submission of a completed Client Information Form, SFS will facilitate Client’s establishment of a Qualified Solo 401(k) Retirement Plan.

This Agreement outlines the terms of service that SFS will be providing you, the Client, and to outline the various responsibilities of the parties to ensure a successful relationship.


SFS Solo 401(k) Establishment & Annual service includes the following:

  • Solo 401(k) Adoption Agreement
  • Solo 401(k) Basic Plan & Trust Document
  • Solo 401(k) Summary Plan Description
  • Solo 401(k) bank account turnkey process
  • Appointment of Trustee
  • Beneficiary Designation Form
  • Solo 401(k) Loan Procedure & Documentation
  • Transfer Request Forms
  • Assistance with qualified funds transfers
  • Investment & Contribution Forms
  • Complete client support
  • 24-hour access to the Client Web Portal
  • Prepare EIN Filing and obtain EIN Number
  • Assistance with filing tax forms when required
  • Interim plan amendments and restatements as required by the IRS
  • Preparation and filing of Form 1099R (when required)
  • Post-PPA Compliant Documents
  • Contributions calculator
  • Knowledge Base

You acknowledge that by submitting an order with SFS you are authorizing us to place orders, electronically or otherwise, with Internal Revenue Service on your behalf.


This Agreement will be effective as of the first date that SFS renders any service on behalf of Client and will continue until cancelled as set forth in this Agreement. The billing will automatically continue on an annual basis and Client will experience a recurring annual charge of $200 billed automatically to Client’s credit card on file. For purpose of identification and billing, Client agrees to provide SFS with and maintain accurate Client information, including Client legal name, address, telephone number, email address, valid credit card number and expiration date. Failure to maintain this information will result in suspension or cancellation of Client’s right to use the Service. $50 late fee will be applied to all payments over 90 days late.


You have a seven day Right of Rescission period beginning on the date your order is submitted. To exercise your rescission rights under this clause, you must notify SFS in writing prior to midnight of the seventh day. In the event you wish to cancel services after that time, a $300 administrative fee, as well as any actual costs will be deducted from any refunds. Once we provide you with the completed documents no refunds can be processed.

Either party may terminate this Agreement at any time by written notice. Termination of this agreement shall take effect on the next business day following receipt of written notice. If the contract is terminated by the client, a fee of $95 shall apply for material costs and effort and will cause our official plan records to indicate that your 401(k) plan is inactive. This may cause the IRS, Department of Treasury, Department of Labor and/or other government agencies to consider the tax benefits and tax treatment of your retirement funds to be null and void. It is recommended that you do not terminate this agreement until you have transferred all of its funds to another qualified plan or restated your existing plan with another document provider and consulted your legal and tax advisor. Unless stated otherwise herein, no refund shall be issued, and no prorated refunds will be issued.

All notices to be given by either party under this Agreement must be in writing and must be delivered by personal delivery electronic mail, with a copy sent on the same day by U.S. Mail, directed to the most recent address(s) provided by the party(s). These addresses may be changed by giving notice in the manner set forth in this Section.


SFS will provide a variety of services in connection with Client’s adoption and implementation of Profit Sharing Plan (referred to as the “Plan”) organized with a section 401(k) election, into which you and an eligible, employed immediate family member may elect to contribute.

SFS is not a financial or legal advisor. Client and plan participants should consult with an attorney, professional tax advisor and/or investment advisor when establishing or changing a 401(k) plan and/or the underlying funding vehicles.

SFS does not provide clients with investment advice of any kind and that all investments made using the plan are Client’s sole responsibility as the designated Trustee(s) of the 401(k) plan. Client holds SFS harmless for any and all investment decisions and actions taken by Client.

Subject to provision of reasonable advance written notice to Client, SFS reserves the right to change the terms of the Service, or its operating policies, or to add additional terms or policies at any time, and such changes or additions shall become effective upon the Client’s next renewal. Client’s next renewal of the Service constitutes acceptance of such change or addition. Therefore the Client is advised to review these terms and the incorporated policies periodically.


The responsibility for maintaining the Plan in legal compliance (including but not limited to tax qualification and the avoidance of prohibited transactions) rests solely with the Client. Client acknowledges and agrees to maintain the investments and procedures within all IRS regulations and holds SFS harmless for decisions and actions taken by Client.

Client acknowledges it is a Fiduciary as defined under the Employee Retirement Income Security Act of 1974 (“ERISA”). In its capacity as a fiduciary, Client represents and warrants that its adoption of the Plan is permitted by the relevant governing instruments of such Plan, and that Client is duly authorized to enter into this Agreement. Client also acknowledges that any party executing and delivering this Agreement on behalf of the Plan is a “named fiduciary” (as defined under ERISA).


Both ERISA and IRS rules prohibit certain transactions between a qualified plan and “disqualified persons.” The purpose of the rules is to prevent self-dealing and to minimize conflicts of interest that could adversely affect the plan. ERISA §§ 406-408 and Internal Revenue Code § 4975 detail these rules. Other regulations and notices issued by the DOL and IRS further refine and explain the rules. Since your plan is self-directed, it may be possible for you or other participants to purchase nontraditional assets with plan funds. Some of these transactions could violate the rules. Note: it is very important that you understand what the rules are before investing or otherwise interacting with plan assets. SFS provides some general guidance on its website but that does not substitute for legal or tax advice. You must consult your own independent advisor when deciding how to invest your plan assets.


If your plan funds are invested in certain assets, there could be special tax consequences.  UBIT (Unrelated Business Income Tax) applies to plan investments in active businesses.  For example, if you invest your plan in a limited partnership that incurs taxable active income, then the allocation of income that passes through to the plan would be subject to UBIT (which is taxed at trust tax rates – currently less favorable than corporate rates).  There are exemptions from UBIT for certain passive investments such as dividends, royalties, interest, and real property rent.  Thus, if your plan invested in a C-corporation that issued dividends to its stockholders, the plan should not have to pay UBIT on those dividends (because the corporation is already paying its taxes at the entity level).  Note that the plan is expected to invest in long-term passive investments for your retirement and cannot run a business itself, so there could be problems if your plan is too active in its activities (such as flipping houses).  Active enterprises may be run in an entity owned by the plan.  UDFI (Unrelated Debt-Financed Income) applies to passive investments that utilize debt financing.  For example, if your plan purchases tax lien certificates and borrows 50% of the purchase price, then approximately half of the first year’s revenues would be subject to UDFI taxation.  As the debt is paid down, the UDFI fraction is reduced.  Qualified plans may be exempt from UDFI if the debt is used to purchase real property.  It is important to understand UBIT and UDFI consequences when engaging in self-directed plan investments.  SFS does not provide legal or tax advice for your particular situation so be sure to consult a competent, independent advisor if these issues may apply to your investment choices.

By signing this agreement you confirm that you have read the above section, understand its importance, and will consult with an independent advisor to determine how these issues might affect you and your plan.


Title I of ERISA requires that all pension plans be bonded to protect plan assets from loss due to improper use (such as embezzlement). Some plans are not subject to Title I, however. Only plans that cover at least one “employee” are deemed to be under Title I. Solely for purposes of that rule, certain persons are not considered employees: partners (and their spouses) in a partnership as well as one person (or one person and spouse) who own 100% of a business, whether incorporated or not. Plans that cover only those persons are deemed a “one-participant plan” and do not need bonding. Note: All other plans need bonding! Leased employees may count as employees for this purpose. Also, an “independent contractor” may be deemed to be a common law “employee.” It is your responsibility to determine whether your plan qualifies as a one-participant plan. Most plans will need to file an annual information return (Form 5500 and Schedule I). You can choose your own preparer or SFS can refer you to an independent accountant. One-participant plans that meets other requirements can file the simpler Form 5500-EZ. You might not have to file at all if you qualify for Form 5500-EZ and plan assets remained below a specified amount (see Form 5500-EZ Instructions).


The Solo 401k Plan requires Administrator and one or more Trustees. Each will have substantial fiduciary duties under ERISA rules. Neither SFS nor its employees or affiliates will be acting as the Trustee, Plan Administrator or TPA. You or another employee can be the Trustee or you can hire an independent Trustee. By default, the Business Entity sponsoring the plan will be named the Plan Administrator and the Applicant will be named the Plan Trustee. Using Co-Trustees will require two signatures on each transaction, so one Trustee may be simpler. However, if there is not a Co-Trustee, then you may wish to designate a Successor Trustee, who will have authority to access the Plan funds in case the primary Trustee should resign or else become deceased or incapacitated. If you wish to designate a person or entity OTHER THAN the Applicant to act as Trustee, SFS can change the plan documents (only if SFS is informed prior to the initial processing of application). SFS must receive the separate written appointment and it must state, for each Trustee, the Trustee(s)’s name, SSN/EIN, address, phone and e-mail information.

The Applicant(s) understands that proper plan administration and operation may require substantial efforts and knowledge for the plan to remain tax-qualified.  SFS will NOT be involved in any manner with the administration of the Solo 401k plan as Plan Administrator, Third-Party Administrator (TPA) or as Trustee.  The Applicant(s) agrees and understands that the Applicant(s) or the Applicant(s)’s sponsoring company will be considered the Plan Administrator for the Solo 401k and that the Applicant(s) will be considered the Solo 401k Trustee(s) (unless another person or entity is defined in this application and such person or entity formally agrees to accept such appointment).  Some plan administration tasks could include maintaining adequate ERISA bonding, performing annual plan asset valuations and Form 5500 filings, providing all plan participants with required reports, enrolling new employees, etc. If assistance is needed for plan administration, the Applicant(s) must retain a separate, independent advisor and/or TPA for such assistance.  SFS do not provide such assistance or any legal, tax or other professional advice or consultations.


For plan testing purposes, ERISA rules treat multiple employers as though they were one employer if there is sufficient common ownership or else a combination of joint ownership and common activity. This applies to all forms of business entities. When the rules are applied to a group of commonly owned corporations, it is called a “controlled group of corporations.” When applied to a mixed group of corporations, partnerships, sole proprietorships, or other forms of business, it is referred to as “trades or businesses under common control.” Groups that are based on common ownership or joint activity (or a combination thereof) are referred to as “affiliated service groups.” The reason this is important is because if you own two or more entities, you may need to count the employees of each entity as being potentially eligible for this plan. It also affects which versions of Form 5500 you may file (for example, plans sponsored by a controlled group cannot file Form 5500-EZ). Moreover, the rules take into account what is known as “constructive ownership,” which means that ownership interests by certain related persons/entities may be added to your own interests to determine how much total ownership each of you have. Still other rules allow you to exclude certain interests. These rules are very complex and neither SFS nor any of it’s affiliates or employees can provide specific professional advice for your situation. SFS can provide a reference to the rules, if you believe this may apply to you, so that you can consult with a competent, independent advisor. The plan documents will indicate that your company is not part of a controlled group or affiliated service group. If this is incorrect, you must amend the plan accordingly.

By signing this agreement you confirm that you have read the above section, understand its importance, and will consult with an independent advisor to determine how these issues might affect you and your plan.


Earned income, generally speaking, is business revenue that is derived from the use of the labor of the owners, employees or contractors to produce and/or sell products, material, commodities, services or labor – in other words, an active business enterprise. Payroll taxes must be paid on the income. Unearned income, generally speaking, is revenue derived from passive ownership of investments or investment property and is not subject to payroll taxes. The source of unearned business income is often royalties, interest, dividends, property rentals, capital gains, or “S” corporation distributions. It is VERY IMPORTANT to know that YOUR BUSINESS ENTITY MUST GENERATE “EARNED INCOME” (i.e., income that is subject to payroll taxes and is reportable on a corporate return or passed through to the owners’ Form 1040, Schedule C). This is because a qualified employee plan, such as Solo 401K, cannot be sponsored by a business that does not generate earned income that is subject to payroll taxes. Only earned income can be used to make employee and employer contributions. Therefore, you cannot use a passive (Schedule D or E) entity to sponsor your Solo 401K plan.


Since the operation and administration of an employee plan is dependent on the classification of employees, we need to know about your current and/or expected employees in determining if you may find useful certain plan features, such as Immediate vs. Delayed Eligibility.  Moreover, TO QUALIFY AS A “SOLO 401K” WITH MINIMAL ADMINISTRATIVE OBLIGATIONS, your plan must meet all of the IRS requirements for a “one-participant” plan which is based on eligibility of employees and ownership of the plan sponsor.  Your Representative can give you more information about this or you can review the definition by looking at the “Form 5500-EZ Instructions” on the IRS website.


The Client (including all users authorized by the Client) is hereby granted a non‐exclusive, non‐transferable license to use the Service and plan documents in accordance with the terms of this Agreement for the single company or entity identified herein.

Client’s use of the Service is subject to the following restrictions: Client will not, and will not permit others to: (a) modify, copy, or otherwise reproduce the Service in whole or in part; (b) reverse engineer, recompile, disassemble, or otherwise attempt to derive the source code from or structure of the software used in the Service; (c) distribute, sublicense, assign, share, timeshare, sell, rent, or lease the Service; (d) remove any proprietary notices or labels. All rights not expressly granted to Client are reserved by SFS. There are no implied rights. If you choose to terminate our services, you may no longer use our plan documents and we will no longer provide you with any plan updates, modifications, required amendments or voluntary amendments.


SFS agrees to protect and not disclose to third parties not directly associated with the transaction or services rendered under this Agreement, any personal or private information. However, this clause does not pertain to government agencies or law enforcement agencies. SFS uses commercially reasonable practices, including encryption and firewalls, to ensure safety of Client’s information. However, Client acknowledges that the Internet is an open system and SFS cannot and does not warrant or guarantee that third parties cannot or will not intercept or modify Client data.


This Agreement supersedes all prior and contemporaneous representations, communications, or agreements, either oral or written, and constitutes the entire understanding of the parties with respect to the rights and obligations of the parties under this Agreement. Any modification of this Agreement will be effective only if it is in writing signed by the party to be charged.

Waiver; Construction. No waiver of any breach or default of any term or provision of this Agreement shall be deemed a waiver of any other term or provision of this Agreement, and no waiver shall be valid unless in writing and executed by the waiving party.

Arbitration. Any controversy or claim arising out of this Agreement (whether contract, tort, or both), or the breach of this Agreement shall be arbitrated in Orange County, California, in accordance with the then existing applicable Rules of the American Arbitration Association. The award of the arbitrator(s) shall be final and binding on the parties, and judgment upon the award may be entered in any court of competent jurisdiction. Each party shall bear its own costs, attorneys’ fees and its share of arbitration fees. This Arbitration provision does not constitute a waiver of the parties’ rights to a judicial forum in the instances where arbitration would be void under applicable law. This provision is voluntary.

Facsimile and Digital Signatures. The parties agree that this Agreement and any related documents may be executed by facsimile or digital signature, which will have the same effect as an original signature.

Partial Invalidity. If any part of this Agreement is determined by a court or arbitrator to be wholly or partially unenforceable or invalid for any reason, such part will have no effect, but the remainder of the Agreement will remain effective and enforceable.

No Recovery of Consequential or Exemplary Damages. In no event shall either party be liable for loss of profits or any general, incidental, consequential or punitive/exemplary damages, however caused.

Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California without giving effect to any conflict of law provisions, except to the extent that such laws are preempted by ERISA.