Converting To Self-Directed Solo 401K

[Guest cloud9]

Hi,

Husband / wife have existing solo 401K for S-Corp at major brokerage. However, they would like to convert to a self-directed solo 401K is to increase the available investment options, such as investing in alternate investments.

Currently, the brokerage firms provides all the solo 401K plan documents / adoption agreements / annual reporting and recording keeping. And brokerage also provides updates to plan documents free of charge to keep in compliance with new rules and regulations.

However, if they were to move to a self-directed solo 401K model, the brokerage would no longer provide those services.

1) What is the process to convert a existing Solo 401K at a retail brokerage into a self-directed Solo 401K?

2) What are the annual recordkeeping / maintenance operations / filing requirements to maintain a self-directed solo 401K, compared to a solo 401K at a major brokerage?

[ESOP Guy]

I would advise you to find and speak to a look 401(k) Third Party Administrator (TPA) in your area. While it won't be free they should be able to help you set yourselves up with what you want for a fair price.

The answer is "yes" to both questions.

There is a chance you would need to up date your plan documents to convert.

More likely you will need help with some of the annual work. There is not very much when it is just two spouses vs even adding one employee. But mistakes in this area can be costly and a little up front money is cheap insurance to stay out of trouble.

Hope that helps.

[Bird]

Good advice above. This is relatively easy stuff if you're in the business, but extraordinarily complex if you're not.

Also I am skeptical that "annual reporting" includes 5500 reporting by the current brokerage firm. I don't think I've ever seen a brokerage firm do that. FWIW.

[K2retire]

This question doesn't make sense. If the owner employee is not directing the investments at the brokerage house, who is? I've never heard of such a plan not being a "self directed" plan. Where are they hoping to find more investment options than with a brokerage firm?