Follow our Blog and contact our Trusted Advisors to help you get your Solo 401k set up before the December 31 deadline. Now is the time to take action and take control of your retirement.
Brokerage houses and custodians set up solo 401(k) plans. But, if you want checkbook control, you will want to contact an advisor that provides a prototype plan that will allow you, the trustee and administrator of your own plan, to open a “trust” type checking account at your bank. With this type of plan, there is no need to set up an LLC, however, you can invest in an LLC with other investors to pool funds for larger purchases or developments.
We often think only of contributions to retirement accounts. Many of us have been contributing (accumulating capital) for many years. Our mature retirement accounts can be transferred or rolled over from the typical brokerage account to self-direction and checkbook control. Rather than concentrating on contributions, we can now direct our funds to a greater breadth of investment choices. For instance, many of my clients have transferred funds that started in an employer company 401(k), ended in a solo 401(k) income producing real estate - unretired boomers!
IRA accounts have had the authority to be established and housed with a custodian for alternative investments since 1974. In my early days of retirement real estate investing it was a struggle because few knew about it and there were few banks that had stepped forward to be custodians.
Solo 401(k) plans were created through tax law and allowed beginning in 2002. These plans are designed primarily for the self-employed with no employees and owners that do not control other entities with employees.
If you believe as I do, that our retirement will soon be entirely self-funded, it is time to become aware of possibilities and opportunities. Virtually all retirement funds are self-directed. In a general sense, we all get some say in how our funds will be invested. If you are an advisor to clients soon to be facing retirement, you need to get ready.
I like to say, "company is coming." Your clients are searching for ways to direct their investments to more than the stock market. Many are discovering that they can make so-called alternative investments. Real estate, for instance, is a popular idea for a self-directed retirement account. Many of my retired clients are asking about how to structure IRA LLC investments or how to move their big company 401(k) to a solo 401(k) to gain checkbook control.
I am not a baby boomer! I was born about six months too early for that distinction. However, I think like a baby boomer. I want control of my finances. But control comes with its own set of problems. Perhaps it is as I wrote in a poem, “… long before I learned that age brings clarity and creativity comes only after learning the notes.” We all need to prepare for the new challenges of truly self-directed retirement. It requires that we educate ourselves so we can educate the clients and customers that depend upon us. It is difficult to advise others if we do not have a full box of tools to do the job. We need to learn the notes.
