How to start a Roth 401 k with a partnership

[Guest rydercurry@hotmail.com]

I have used the search function here, but did not get my answer. I was brought here from http://www.roth401k.com/index.htm

My Father and I have a car dealer partnership. Just us 2, no employees. This is a "side job," we both have full time jobs.

He is 50 years old and all ready has an established retirement account. However I am currently 24. I would like to start a Roth 401k plan under this car dealership, but it seems when I go to financial institutions, they want to get me a regular 401k plan.

Does anyone know what companies would be willing to offer a Roth 401k for our small company?

What would be one of the best companies to go with?

Or am I going about this the wrong way?

[Jim Chad]

You do have to start with a "regular" 401(k) Plan and then choose to include the option of allowing ROTH deferrals.

It is not legal to allow ROTH deferrals and not pretax deferrals. But it is legal to never use the pretax option.

[masteff]

Just to add to what Jim said... So the real trick when talking to the financial institutions will be to make sure they confirm the regular 401(k) they're trying to sell you does in fact allow you to elect a Roth 401(k) feature. Most should have Roth as a feature but you don't want to get stuck w/ the one firm who doesn't.

[Guest rydercurry@hotmail.com]

I have found some more information.

I got called back from fidelity. Lady was very nice and informative, and could interpret stuff into laymen terms.

Thanks to you guys I knew that you actually start a 401 K plan, and have ROTH deferrals.

First off is it OK for me to post prices here that they quoted me? or is that not allowed?

I can make up to $15,500 in personal contributions. The company I own can make an additional $29,500 contributions. But the employer contribution must go into a regular 401K account. So I could get $45,000 total to store in to a retirement type saving account. Much better then the $5000 max for a 2008 ROTH IRA.

So the $15,500 of my personal contribution would grow TAX free. But the employer contribution would be a immediate tax break for the company, but I would pay taxes on it when I withdrew the money after retiring.

This dual account would make the accounting for the my company a bit more complex. Since I have to manage what I the employee put in, and what The company matched for the employee to get tax benefits.

Fidelity charges $x amt (will put amount in when I get the OK) a year to manage the account for the company if you have the "safe harbor" plan (Still not sure what Safe Harbor stuff is, but it sounds like it is a stated formula that is used to determine what percentage your company will match for employees, and it helps alleviate you from discriminating, and allowing one employee to have different matching from another.) Basically IRS give you a discount for doing Safe Harbor, and they pass the saving to you.

It is $x amt (will put amount in when I get the OK) per year with out the Safe Harbor thing.

You get 44 mutual funds to choose from

2 Indexes

12 Lifestyles (kind of a privately managed fund)

So basically, since they dont charge for transferring mutaul funds, cause they are "no load" I will be paying ~2,250-2,750 for them to handle the administrative stuff like Tax return, record keeping, Daily valuations, Loans, Trustee services and a lot more. (I have a list of all of it)

Could I do all this stuff "In House" and If I was willing to do all the paperwork, start a ROTH 401K inside the business/partnership, so I don't have to pay Fidelity to manage it? Or is that a bad Idea. especially not knowing where to start with all the paper work?

[Bird]

You know just enough to get yourself into trouble if you try to do this yourself. I mean, you're on the right track as far as what you want to do, but IMO it's not possible for a layman to do the implementation. It sounds like Fidelity is selling you a packaged deal that would be appropriate for a company with some employees, but I think there are some features that you don't need at all (e.g. a "safe harbor" is a mandatory employer contribution that buys your way out of 401(k) testing...but if you have no employees there is no testing to worry about).

I'd suggest that you look up "pension and profit sharing" in your local yellow pages, and/or ask your accountant for the name of a pension person, and then call one or two of those names and describe your situation and what you want to do. I'd hope that could find someone to do what you want a little more efficiently.

[Guest rydercurry@hotmail.com]

Can I post the prices or would that be a violation of posting agreements?

And I'm exploring another avenue. Fidelity also offers a sole proprietor 401K plan. Partnerships can do it if you are husband and wife only. But this plan is cheaper. But I dont know if it has the ROTH option.

Also Im talking with US BANK next to see what they offer.

[Bird]

Can I post the prices or would that be a violation of posting agreements?

I think you did already.

Hint: Worry less about the investment platforms. You can set up a plan with a third party administrator, let that person handle the compliance and reporting, and then go wherever want to place the investments, including Fidelity. If you do decide to put the investments with Fidelity, be very careful because they will think that you want them to set up a plan document. You don't - you just want them to hold the money. I think if you use the magic words "non-prototype account" they will understand.

[Kimberly S]

Also be sure your price comparisons are for comparable services. A full service provider will help you much more for the additional fees. A discount provider will charge you less but expect you to do more of the work. For example, you might be required to do your own calculation of the employer match contributions. Contrary to one of your earlier posts, a safe harbor match does not permit people to get different matching percentages -- if you mess it up you have all sorts of correction liabilities.

[Guest Dolores]

I have used the search function here, but did not get my answer. I was brought here from http://www.roth401k.com/index.htm

My Father and I have a car dealer partnership. Just us 2, no employees. This is a "side job," we both have full time jobs.

He is 50 years old and all ready has an established retirement account. However I am currently 24. I would like to start a Roth 401k plan under this car dealership, but it seems when I go to financial institutions, they want to get me a regular 401k plan. I end up

Does anyone know what companies would be willing to offer a Roth 401k for our small company?

What would be one of the best companies to go with?

Or am I going about this the wrong way?