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  • Multiple solo 401k accounts

    I have an S corp and I currently have a solo 401k/profit sharing plan with fidelity. I am thinking to open a self directed solo 401k account with RocketDollar or some other provider and plan to direct future contributions to the new account. Is it possible to still keep by account with Fidelity or do I need to rollover all funds into the new account? Essentially, can I hold both 401k accounts for the same S corp simultaneously?

    Thanks

  • #2
    Originally posted by Karma310 View Post
    I have an S corp and I currently have a solo 401k/profit sharing plan with fidelity. I am thinking to open a self directed solo 401k account with RocketDollar or some other provider and plan to direct future contributions to the new account. Is it possible to still keep by account with Fidelity or do I need to rollover all funds into the new account? Essentially, can I hold both 401k accounts for the same S corp simultaneously?

    Thanks
    Multiple accounts under the same plan would be ok but multiple plans would not be ok. You need to understand the difference. Rocket dollar doesn’t offer “accounts”

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    • #3

      A 401k is a plan with accounts. Every 401k plan must have and remain compliant with the plan document and an IRS approved opinion letter

      The IRS opinion letter for Fidelity and the other one-participant 401k plan provider's does not allow multiple simultaneous operational plans.
      • You can move from one 401k provider to another by amending to the new provider's 401k plan adoption agreement/plan and transferring the accounts, or
      • You can amend to a 401k adoption agreement/plan document that will support investment only accounts at one or more brokers.
      What exactly are you looking for that Fidelity doesn't provide?



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      • #4
        Thanks for clarification and helping me understand the difference between plan and account.

        I am planning to invest some money into real estate and looking for self directed solo 401k providers. As I do not need all the money from my current fidelity, I was hoping to not to liquidate all the funds from fidelity and keep the account.

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        • #5
          Originally posted by spiritrider View Post
          What exactly are you looking for that Fidelity doesn't provide?
          That was my question also

          Comment


          • #6
            Originally posted by childay View Post
            That was my question also
            I am planning to invest in real estate and the reason to move to a self directed 401k. Also, to do MBDR with the self directed 401k, as Fidelity does not allow after tax or Roth contributions.

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            • #7
              Originally posted by Karma310 View Post
              I am planning to invest some money into real estate and looking for self directed solo 401k providers. As I do not need all the money from my current fidelity, I was hoping to not to liquidate all the funds from fidelity and keep the account.
              As I indicated in my second bullet point. You can do what you want, just not with two different 401k plans.

              You can amend* your current Fidelity Self-employed 401k plan to a 401k adoption agreement/plan document provided by a third party** that provides the features you need. You could then:
              • Do a trustee to trustee transfer*** of your Fidelity 401k account assets to a Fidelity investment only account under the new 401k adoption agreement/plan document. Unlike with different 401k custodians, an in-kind transfer should be possible. Contact Fidelity.
              • Purchase real estate provided the new adoption agreement/plan document supports check book control.
              • Make employee after-tax contributions, in-plan Roth rollovers (IRRs) and/or in-service Roth rollovers provided the new adoption agreement/plan document has these features.
              *By executing the amendment section of the new 401k adoption agreement.

              **As WCI forum regulars know, I am not in favor of inexperienced individuals just using online 401k document resellers and fully administering such a plan. You don't know what you don't know.

              However jacoavlu who replied first, demonstrated that an individual can sufficiently educate themselves to fully self-administer an independent one-participant 401k plan. With that said, I continue to believe most people should use a third party administrator (TPA) for at least the first one or two years. I have no idea what administrative/compliance services Rocket Dollar does and doesn't provide.

              ***Fidelity will be the source trustee and you or a TPA will be destination trustee.

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              • #8
                Thanks a lot for explaining it in detail. I am spending time to educate myself more on this. But, I will definitely go with your suggestion on using TPA for first couple of years. Are there any recommendations on who should I go with, please?

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                • #9
                  I don't have any recommendations for a TPA supporting checkbook control necessary for real estate transactions.

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