Menu Close

IRA Financial Group Blog

How to Choose the Best Solo 401k Provider

Choosing the Best Solo 401k Provider
4 Minute Read

When it comes to choosing the best Solo 401k provider, not all companies are the same. In a perfect world, all providers would offer all the same benefits at the same cost. However, in the real world, that’s just not the case. While many companies offer Solo 401(k) plans, not all of them are created equal. Here at IRA Financial, we feel we’re the best Solo 401k provider and offer everything you could possibly need at a reasonable cost. In the following, we’ll talk about all the options to look for in a Solo 401(k) provider, including cost, investment opportunities, Roth and loan options, and checkbook control. Read on to see why IRA Financial is the best Solo 401k provider for you!

What is a Solo 401(k) Plan?

Let’s take a minute to familiarize everyone about just what a Solo 401(k) plan is. It’s a traditional 401(k) that’s tailored for the self-employed individual or owner-only business operators. Basically, if you work for yourself in some capacity, you can open a Solo 401(k) plan, also referred to as an Individual 401(k) or Self-Employed 401(k). A Solo 401(k) offers high contribution limits of $56,000 for 2019 ($62,000 if you are age 50+) annually, which makes it better than other self-employed plans. You can invest in anything not disallowed by the IRS, such as many collectibles and life insurance. If the provider allows for it, you can also borrow money from the plan or make designated Roth contributions.

Read This: Not All Solo 401(k) Plans Are The Same

Now that you know what a Solo 401(k) plan is and who can open one, let’s talk about the benefits of it.

Alternative Investments

The first thing to look at in a Solo 401(k) provider is what types of investments you are allowed to make. You don’t want a company that’s going to limit your investment choices. One of the major benefits of a Solo 401(k) plan is the ability to invest in alternative investments, such as real estate, precious metals and foreign currencies. Certain big name financial institutions will only allow for traditional investments (stocks, bonds, mutual funds). While this is fine for many investors, it doesn’t cut it for the rest of us. With an IRA Financial Solo 401(k) plan, you can invest in anything you want, both traditional and alternative assets. Our experts are well versed it just about every type of investment you want to make. We’ll make sure you always stay IRS compliant and never lose the tax advantages of your plan.

The Roth Solo 401(k) Plan

Another popular option for our clients is the Roth Solo 401(k) plan. For those that don’t know what a Roth is, it’s a 401(k) that allows for after-tax contributions. The major benefit is that all qualified withdrawals are tax-free! Akin to the ever popular Roth IRA, a Roth 401(k) does not provide an immediate tax break. You fund it with after-tax dollars, but so long as the account has been open for at least five years and you are at least age 59 1/2, your distributions are both tax- and penalty-free. One other advantage of a Roth Solo 401(k) is the ability to skirt the Required Minimum Distributions (RMD) rules. Unlike a Roth IRA, you must take RMDs from a Roth 401(k) plan starting at age 70 1/2. To avoid having to take these distributions, you may roll over your Roth 401(k) into a Roth IRA. That way, you can leave your entire balance to your beneficiaries if you don’t need the money yourself.

The Solo 401(k) Loan

Ever been in a tight jam and needed money right away? Maybe you needed start-up capital for a new business. How about that dream vacation or new car? While we don’t recommend using retirement funds for that last suggestion, but it might make sense to utilize a Solo 401(k) loan for the others. If your provider offers a loan option, like IRA Financial does, you can borrow money from your Solo 401(k). You can take out a 401(k) loan at any time and for any reason (might be limited by your provider). The maximum amount you may borrow is the lesser of $50,000 or one half of your balance. A few benefits of a Solo 401(k) loan are there is no credit check required, faster turnaround time than a bank loan and the interest get paid back to your plan. It’s not usually ideal to take funds from your 401(k), however the option is there if you need it. The most popular investment that’s made with a 401(k) loan is new business financing.

Checkbook Control

Earlier we talked about the ability to invest in alternate assets, such as real estate. While the best Solo 401k providers offer this ability, not all of them give you the freedom to invest when you want. Other providers offer “custodial-controlled” Solo 401(k) plans. With these types of plans, you have to ask permission to make your investment. This can be a long process since providers generally run a 9-5 weekday only operation. But what if you find an investment off-hours? Well, with those providers, you’ll have to wait and might lose out on an investment opportunity. However, IRA Financial offers you freedom with “checkbook control”. This allows you to attach a checkbook account (debit card, wire transfer, etc.) to your Solo 401(k) plan. Now, you can make any investment you want, anytime you want, just by writing a check. No need to wait for permission from your plan provider. This is what a true Self-Directed Solo 401(k) plan is.

Best Solo 401(k) Provider Fees

Many custodians will charge thousands of dollars to set up a Solo 401(k) plan with them. Further, they may charge you hundreds of dollars in maintenance fees. This is in addition to any other administrative or miscellaneous fees they may charge. IRA Financial, on the other hand, has a one time establishment fee of only $895. The annual compliance fee is only $199/year. It shouldn’t cost an arm and a leg to take advantage of these tax advantageous retirement plans. Shop around and make sure you’re getting the most bang for your buck. You may find lower prices, but they’re probably won’t offer everything you should have with your Solo 401(k) plan.

Contact Us

If you still have any questions about who the best Solo 401k provider is, why don’t you drop us a line? One of our experts can answer any questions you might have about our services. You can send us an email at You can also call us directly @ 800.472.0646. Find out why we’re the top Solo 401(k) provider out there!

Related Articles