Individual/solo 401k plan sequence number

[BGLA]

I have a solo 401K plan for my LLC (of which I’m the sole member and no employees) and I have an associated roth option. In my first restatement completed earlier this year, I marked them as plan sequence numbers 001 and 002 and I called them ABC LLC Individual 401k and ABC LLC Roth 401k. Since they are in different account and I always had to complete two sets of paperwork I thought of them as separate plans. Was that incorrect? Should they be the same 001 plan sequence and only be called by one name.

I'm having to move my accounts since TD Ameritrade, where I have been, is discontinuing the business. As I do the paperwork with a new custodian, it got me thinking. Appreciate any comment. Thanks!

[RatherBeGolfing]

7 hours ago, BGLA said:

Since they are in different account and I always had to complete two sets of paperwork I thought of them as separate plans. Was that incorrect?

Incorrect? No.

Necessary? Also no.

 

7 hours ago, BGLA said:

Should they be the same 001 plan sequence and only be called by one name.

They don't have to be the same, but they can be. 

What is required is that different "sources" of money in the plan are tracked separately.  If you have both pre-tax and Roth contributions, each source should be credited with its own earnings, losses, fees, etc. Same if you add match or profit sharing.  If you are doing this without a TPA or if the custodian cannot/will not track sources separately, it may make sense to have an account for each source.  If the custodian requires new plan paperwork for each account, you will end up with more than one plan.

If you are charged any fees for creating or maintaining each account/plan, and I suggest you add those fees up and look into using a TPA if comparable.  

[Bird]

It's not clear to me if there are two different plan documents or one plan that happens to include Roth deferrals that happen to be held in a separate account.

[BGLA]

33 minutes ago, Bird said:

It's not clear to me if there are two different plan documents or one plan that happens to include Roth deferrals that happen to be held in a separate account.

It is technically both. I had to effectively complete separate set of plan documents when I initially started the plan at ameritrade and am having to do the same at E*Trade, now that I’m having to move them. But in a purist sense, it’s a single plan with a Roth option.
 

Based on @RatherBeGolfing’s comments, I think it makes sense to continue having them use separate plan sequence name/number so as to keep source-funds tracking simpler both for myself and IRS. 

[RatherBeGolfing]

20 minutes ago, BGLA said:

But in a purist sense, it’s a single plan with a Roth option.

If you have separate documents with 001 and 002, you have two plans.  They have to be considered together for limits and such, but you will need separate Form 5500s when you exceed $250k combined, or when one or both plans terminate.

[Bri]

The thing I don't get in this - a plan isn't allowed to ONLY permit Roth contributions.  Was Ameritrade charging you twice as much to have two plans?

[Bill Presson]

1 minute ago, Bri said:

The thing I don't get in this - a plan isn't allowed to ONLY permit Roth contributions.  Was Ameritrade charging you twice as much to have two plans?

Agreed. This is the issue.

[BGLA]

23 hours ago, RatherBeGolfing said:

If you have separate documents with 001 and 002, you have two plans.  They have to be considered together for limits and such, but you will need separate Form 5500s when you exceed $250k combined, or when one or both plans terminate.

Thank you for pointing out how the form 5500 will work!

[BGLA]

22 hours ago, Bill Presson said:

Agreed. This is the issue.

No, neither ameritrade nor E*trade charges for these accounts with the standard policies. True, the Roth 401k part cannot standalone as a plan, it is contingent on the regular individual 401k.

[Bill Presson]

54 minutes ago, BGLA said:

No, neither ameritrade nor E*trade charges for these accounts with the standard policies. True, the Roth 401k part cannot standalone as a plan, it is contingent on the regular individual 401k.

I wasn't worried about the charges. Just that you CAN'T have a plan with just Roth. So if you have set it up as 002, it's wrong.

[RatherBeGolfing]

2 hours ago, Bill Presson said:

I wasn't worried about the charges. Just that you CAN'T have a plan with just Roth. So if you have set it up as 002, it's wrong.

It is probably much more likely that plan 002 allows for 401(k) and OP just doesn't realize it.  These brokerage account solo plans often use super simplified pre-approved plan docs, so I doubt the end user can permit Roth only in the document.  

[NV]

I also have a solo/individual 401K plan for my LLC (of which I’m the sole member and no employees).  It was first opened it at Vanguard as a new plan and I gave it plan sequence number '001'.  I then moved the plan to Fidelity, designated it as an 'amended plan, amended and restated from another plan document' and used plan sequence number '001'.   Is that correct, or does an amendment or restatement require that the plan sequence number be incremented?  Should I have given the plan the sequence number '002' when I moved it to Fidelity?

[Bill Presson]

4 hours ago, NV said:

I also have a solo/individual 401K plan for my LLC (of which I’m the sole member and no employees).  It was first opened it at Vanguard as a new plan and I gave it plan sequence number '001'.  I then moved the plan to Fidelity, designated it as an 'amended plan, amended and restated from another plan document' and used plan sequence number '001'.   Is that correct, or does an amendment or restatement require that the plan sequence number be incremented?  Should I have given the plan the sequence number '002' when I moved it to Fidelity?

It was the same plan, so 001 is correct.

[NV]

Thank you for confirmation!