Can a beneficiary of my Solo 401k be a non-US citizen?
Can a beneficiary of my Solo 401k be a non-US citizen?
Answer:
To confirm the requirements for Solo 401k beneficiary designation, please consult your tax advisor or estate planner.
Setup
How can I determine if I have earned income?
The difference between earned income and passive income is described here: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income
Contribute to Solo 401k from multiple companies
I want to be able to contribute to my Solo 401k from multiple companies to maximize the contribution potential. How can I do this?
Answer:
To do this, general opinion is that you can set up a holding company for the separate companies and make the holding company the adopting company for the Solo 401k. A holding company is usually a company that doesn’t do any business with anyone, it just owns other companies. The trick to making this work is of course to have the other companies which would be called, “Subsidiary companies” – the companies that go out there and do business and are owned by the holding company.
Those need to be pass-through entities; meaning that they don’t pay taxation at their own level, they just pass through the earning up to the parent company. So LLCs are pass through entities, and if you use LLCs, then one other benefit you’ll get is that you’ll have the subsidiary company structured as an LLC and it only has one owner or one member which would be the parent company. It would be a single member LLC. If you have a single member LLC, it doesn’t even have to file a tax return in the first place. Single member LLCs the IRS instructs to be disregarded for tax purposes. For further clarification, please consult your CPA or tax/legal advisor.
The bank says I have to register my trust into public record. What do I do?
The bank says I have to register my trust into public record. What do I do?
Answer:
When opening a trust checking account, some clients have been told by their banks, “Your trust needs to be registered with [some government organization].”
This may be a bank policy, but it is not law. It is also a very uncommon bank policy. Many bankers are more familiar with publicly filed entities such as corporations and LLCs. These entities are created through a state's Secretary of State office or Department of Corporations. Corporations and LLCs are brought into existence upon the filing of a public record (e.g. Articles of Incorporation or Articles of Organization). Opening a bank account for an LLC or corporation usually involves supplying the bank with this publicly filed document.
A trust, on the other hand, is a private instrument that is brought into existence by the involved parties signing the trust agreement. The trust agreement does not need to be filed with any government office or made into a public record for any reason. Trusts are not state-granted privileges, but instruments granted by common law. Bank officers may not be educated or trained to understand the differences between a trust and a corporation.
Your plan and trust are registered within our document system in order to be covered by our IRS determination letter that states you have a qualified plan.
Making your trust public record is not legally required and provides no benefit. It is something to be avoided. If a bank asks you to register your trust into any public record, you may want to tell them, “A trust is a private instrument. I am not willing to give up my privacy rights, and I believe your request for me to do so is unreasonable. Please open my account without asking me to sacrifice privacy.”
If the bank doesn't waive the request, I would encourage you to do business with another bank who respects your interests. Finding a bank that doesn't have this requirement should be very easy.