The Charles Schwab Solo 401K Plan – What You Need to Know
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August 31st, 2011
The Solo 401K Plan is an IRS approved plan that was designed specifically for the self-employed or small business owner with no employees other than the owners(s).
When it comes to deciding what type of 401(k) qualified retirement plan is best for you, it is important to look at all the options the plan provides to make sure it will satisfy your retirement planning, tax, and investment goals.
Most financial institutions, such as Charles Schwab offer Solo 401K Plans, often called individual 401K Plans. However, if you do not want to be forced to invest all your hard earn retirement savings in the stock market, than the Charles Schwab Solo 401K Plans may end up not being very attractive. In addition, the Charles Schwab Solo 401K Plans will not offer a loan feature or allow you to make Roth Type contributions.
IRA Financial Group’s Solo 401K plan is unique and so popular because it is designed explicitly for small, owner only business.
Unlike a Charles Schwab Solo 401K Plan, by adopting IRA Financial Group’s Solo 401K Plan, you can serve as trustee of the plan and make traditional investments as well as non-traditional investments such as real estate tax-free and without custodian consent.
Have an investment you want to make with your retirement funds, like real estate, but Charles Schwab Solo 401K won’t let you do it? Then IRA Financial Group’s Solo 401K Plan is your solution.
Defer up to $54,550 Annually: Like the Charles Schwab Solo 401K Plan, you can to make tax-deductible annual contributions up to $49,000 annually with an additional $5,500 catch up contribution for those over age 50.
Solo 401K Loan: Charles Schwab Solo 401K Plan offers no loan feature, while IRA Financial Group’s Solo 401K Plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, personal or business investments, a car, vacation, or anything else. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate)
Checkbook Control: The most notable benefit of the IRA Financial Group Solo 401k Plan is that it offers you checkbook control over your retirement funds. With the Charles Schwab Solo 401K Plan, the plan participant is relegated to making traditional investments such as stocks and or mutual funds. In addition, the Solo 401KPlan account is required to be opened at Schwab. With IRA Financial Group’s Solo 401K Plan, the plan account can be opened at any local bank, including Chase, Wells Fargo, and even Fidelity. In addition, with IRA Financial Group’s Solo 401K Plan, the plan participant can make almost any traditional as well as non-traditional investments, such as real estate, precious metals, tax liens, third-party lending, notes, stock, private business, and much more. With IRA financial Group’s Solo 401K Plan, the Plan participant has the freedom to make the investments he or she wants while at the same time to open the 401K account at any local bank. With IRA Financial Group’s Solo 401K Plan, you can serve as the trustee of the plan. Unlike Charles Schwab’s Solo 401K Plan which restricts your investment opportunities to stocks and mutual funds, with IRA Financial Group’s Solo 401K Plan, making a traditional as well as non-traditional investment such as real estate is as simple as writing a check.
Roth Contributions: Charles Schwab’s Solo 401K Plan does not allow for Roth (after-tax) contributions. IRA Financial Group’s Solo 401K Plan contains a built in Roth sub-account which can be contributed to without any income restrictions. In addition, Charles Schwab Solo 401K Plan does not allow for in-plan Roth conversions or rollovers. Whereas, IRA Financial Group’s Solo 401K Plan allows for in-plan Roth conversions. However, the Solo 401K Plan participant must pay income tax on the amount converted.
Cost Effective Administration: Like Charles Schwab Solo 401K Plan, IRA Financial Group’s Solo 401K Plan is easy to operate. There is generally no annual filing requirement unless your solo 401K Plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ). Unlike Charles Schwab, however, the tax attorneys at the IRA Financial Group will assist you in completing this form is required
No Tax on Real Estate Financing: Since the Charles Schwab Solo 401K Plan does allow for real estate investments, you would not be able to benefit from the ability to use nonrecourse financing tax-free when making real estate investments with Solo 401K retirement funds. IRA Financial Group’s Solo 401K Plan will allow one to use nonrecourse leverage tax-free when making real estate investments with plan assets.
IRA Financial Group will take care of setting up your entire Solo 401k Plan. The whole process can be handled by phone, email, fax, or mail and typically takes between 2-7 days to complete, the timing largely depending on the state of formation and the custodian holding your retirement funds. Our 401k experts and tax and ERISA attorneys are on site greatly reducing the set-up time and cost. Most importantly, each client of the IRA Financial Group is assigned a tax attorney to help with the establishment of the Solo 401k Plan. You will find that our fee for this service is significantly less than other companies that perform the same or similar services.
To learn more about the advantages of choosing the IRA Financial Group’s Solo 401K Plan over the Charles Schwab Solo 401K Plan, please contact a tax professional at 800-472-0646 or visit www.irafinancialgroup.com
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