Funding

December 19 2013

Transferring a Fidelity Solo 401k to a Sense Financial Solo 401k

Dmitriy Fomichenko Assets, Bank Account, Funding, Investing, Setup, Transfers and Rollovers

I have a Solo 401k Plan which I originally established at Fidelity. However, I don't like being limited to only the investment options they offer. How do I transfer it to a new self-directed Solo 401k with checkbook control set up by Sense Financial?

Answer:

You would first need to have Sense Financial restate your plan documents. Our plan documents name you as trustee and allow you to invest in alternative investments such as real estate, precious metals, etc., in addition to stocks and mutual funds with a brokerage.

With your restated plan documents from Sense Financial, you can then open a new account at Fidelity for your restated Solo 401k. This new account would be need to be established as a non-prototype account. Fidelity would not function as custodian with this new account.

You will also need to notify Fidelity that you have had your Solo 401k plan restated. You can request that your existing plan be transferred internally to your new account set up for your restated Solo 401k. This would be considered transfer in kind by Fidelity. Therefore, there will be no charges to you because you will not be selling your assets.

November 1 2013

Are there any options to get Roth funds under my control?

Dmitriy Fomichenko Funding, Roth Solo 401k, Setup, Transfers and Rollovers

If you have Roth 401k funds, you can roll them over into the Solo 401k Roth sub-account.

If you have Roth IRA funds, the only way to get them under your control is to withdraw from the Roth IRA account or to transfer them into self-directed Roth IRA. Please contact us for details.

November 1 2013

Contributing from multiple businesses

Dmitriy Fomichenko Adopting Employer, Contributions, Funding, Setup

I own three LLCs (LLC #1, LLC #2, and LLC #3). My Solo 401k is adopted by LLC #3. However, LLC #1 generates significant income. Can I make contributions to the Solo 401k from LLC #1?

Answer:

No. Contributions to your Solo 401k must come from the business that adopted it.

If LLC #1 generates most of the income, then you may want to restate your Solo 401k so that LLC #1 becomes the adopting employer of the plan. For assistance in restating your plan, please contact your Account Manager with Sense Financial.

Another option would be to set up a holding company for the three separate companies. The holding company would own the other companies. The other companies would then be subsidiary companies, doing business while being owned by the holding company. For this option, the Solo 401k would need to be restated with the holding company as the adopting employer of the plan.

The subsidiary companies need to be established as pass-through entities; meaning they don’t pay taxation at their own level. The subsidiaries would pass the earnings up to the parent company.

For example, the subsidiary company could be structured as a single-member LLC. The LLC would have one owner or one member which would be the parent company. As a single-member LLC, the subsidiary company would not have to file a tax return as a pass-through entity. The IRS instructs pass-through entities to be disregarded for tax purposes.

For further clarification, please consult your CPA or tax advisor.

November 1 2013

Rollover Multiple Plans Into Separate Accounts?

Dmitriy Fomichenko Funding, Transfers and Rollovers

I have an IRA Fidelity which is invested in the money market and a 401k withh ADP from the previous employer. I'd like to rollover those funds into my new Solo 401k. Does the money from IRA have to be kept separate from the funds from the 401k?

Answer:

No, all of the rollover funds may be rolled into the same bank account. You will, however, need to setup separate accounts for each type of money, for example: rollovers, employer profit-sharing contributions, elective deferrals and Roth deferrals.

November 1 2013

How much can I transfer from my IRA’s into my Solo 401k?

Dmitriy Fomichenko Funding, Transfers and Rollovers

Is there a limit to how much money I can transfer from my IRA’s into my Solo 401k?

Answer: No.

November 1 2013

Document a rollover or transfer to my Solo 401k

Dmitriy Fomichenko Funding, Transfers and Rollovers

How do I document a rollover or transfer to my Solo 401k?

Answer:

Documenting a transfer from your existing retirement accounts to your Solo 401k when filing your taxes is pretty simple. The exact lines used to enter your transfer amounts will vary depending on what type of account the transfer originated from as well as what form you are using to file your taxes.

Below you will find instructions on exactly what lines to use depending on whether you’re filing FORM 1040 or FORM 1040A (you cannot use FORM 1040EZ if you have retirement account rollovers/transfers to report) and whether the transfer came from an IRA or a 401k or other qualified plan. Be sure to look at the instructions for your situation.

If filing FORM 1040 (not FORM 1040A):

For transfers from an IRA to your Solo 401k:

Enter the total amount of the IRA funds transferred to your Solo 401k on line 15a of your 1040.
Enter the taxable amount of the transfer, “0”, on line 15b of your 1040. Enter “Rollover” next to line 15b of your 1040.

For transfers from a 401k or other qualified plan to your Solo 401k:

Enter the total amount of the 401k (or other qualified plan such as 403b and 457b plan) funds transferred to your Solo 401k on line 16a of your 1040.
Enter the taxable amount of the transfer, “0”, on line 16b of your 1040. Enter “Rollover” next to line 16b of your 1040.

If filing FORM 1040A (not FORM 1040):

For transfers from an IRA to your Solo 401k:

Enter the total amount of the IRA funds transferred to your Solo 401k on line 11a of your 1040A.
Enter the taxable amount of the transfer, “0”, on line 11b of your 1040A. Enter “Rollover” next to line 11b of your 1040A.

For transfers from a 401k or other qualified plan to your Solo 401k:

Enter the total amount of the 401k (or other qualified plan such as 403b and 457b plan) funds transferred to your Solo 401k on line 12a of your 1040A.
Enter the taxable amount of the transfer, “0”, on line 12b of your 1040A. Enter “Rollover” next to line 12b of your 1040A.

Entering this information on your 1040 or 1040A will show the movement of the funds and that the transfers are not taxable.

November 1 2013

Rollover from Thrift Savings Plan (TSP) into a Solo 401k

Dmitriy Fomichenko Funding, Transfers and Rollovers

Can money from my Thrift Savings Plan (TSP) be rolled over into a Solo 401k?

Answer: Yes.

November 1 2013

Can I transfer more money later into my Solo 401k?

Dmitriy Fomichenko Funding, Transfers and Rollovers

If I want to put in more money later can I do that? I want to transfer some more money later from somewhere else?

Answer:

The Solo 401k does not have a time limit for transfers or rollovers within a certain time period. Likewise, the Solo 401k does not have a limit of the number of transfers.

November 1 2013

Can I rollover my Roth IRA into a Roth Solo 401k?

Dmitriy Fomichenko Funding, Transfers and Rollovers

Can I rollover my Roth IRA into a Roth component of my Solo 401k?

Answer:

It is generally understood that everything can be rolled over from one type of account to another type of account freely, with the one exception of a ROTH IRA. ROTH IRA funds can only be rolled into another ROTH IRA. If you need to roll over a ROTH IRA, it will have to be into another ROTH IRA.

While the Solo 401k has a ROTH component to it, the IRS does not allow funds from a ROTH IRA to be rolled over into the ROTH Solo 401k. The ROTH component allows you to make contributions to that ROTH component, rollover funds from another ROTH 401k, or convert your pre-tax portion of the Solo 401k into ROTH.

November 1 2013

Can I rollover an existing Roth with investment to a self-directed Solo 401k?

Dmitriy Fomichenko Funding, Transfers and Rollovers

Can I rollover an existing Roth with another investment to a self-directed Solo 401k?

Answer:

If you’re talking about Roth IRA assets, the answer is no.

Roth IRA assets can only go from a Roth IRA account to a Roth IRA account.

If you’re talking about Roth 401k account assets from another Roth 401k, that’s what’s called a designated Roth account inside of a 401k. Designated Roth account assets inside of 401ks can be moved to another designated Roth account inside of another 401k which you have that ability with your Solo 401k.