Solo 401k - go with Vanguard or someone else

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Dieharder
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Solo 401k - go with Vanguard or someone else

Post by Dieharder » Fri Feb 19, 2016 9:58 am

I asked this question in another thread and it was possibly overlooked. Asking for opinions on opening Solo 401k. My obvious choice is Vanguard since I already have accounts for many years, and qualifies for account status when combined with other accounts (IRA, Roth, Taxable) to avoid any account maintenance fees.

What made me think about other places such as Fidelity and TD Ameritrade for instance is dicussion on extra paperwork and some other downsides to Vanguard plan. I would like to understand what they are. What additional paperwork are we talking about here?

Ideally I'd like to keep it simple and with one family by going with Vanguard, but if there are significant drawbacks with Vanguard then I would have too look at Fidelity. I don't like the investment options available at Fidelity, mainly I will be limited to just the spartan index funds. I am very familiar with all the Vanguard funds and I even invest in some of the active managed funds, but with Fidelity I have no idea on any of their funds and not very keen on it anyway except spartan index funds. So, again, my preference is clear, unless there are some huge drawbacks, what am I missing?

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Fri Feb 19, 2016 10:16 am

I am not aware of any extra paperwork for Vanguard compared to the others. Maybe you are thinking of the difference between SEP IRAs and individual 401ks. The following main points come to mind:

Pros:
Vanguard does have a Roth Option
Vanguard does not allow loans (you might think that as a con, but I think it is a pro)

Cons:
Vanguard does not allow incoming IRA rollovers
Vanguard does not allow Admiral Shares in their Individual 401k

ERISA Stone
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Re: Solo 401k - go with Vanguard or someone else

Post by ERISA Stone » Fri Feb 19, 2016 10:27 am

Spirit Rider wrote:Pros:

Vanguard does not allow loans (you might think that as a con, but I think it is a pro)



Can you elaborate? Even if an institution allows loans (such as TDA), that doesn't mean the plan sponsor has to choose to allow it in the plan.

radiowave
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Re: Solo 401k - go with Vanguard or someone else

Post by radiowave » Fri Feb 19, 2016 10:43 am

You can move Rollover IRA funds into a Fidelity Solo 401K, it that is relevant to your situation.
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Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Fri Feb 19, 2016 11:46 am

ERISA Stone wrote:
Spirit Rider wrote:Pros:

Vanguard does not allow loans (you might think that as a con, but I think it is a pro

Can you elaborate? Even if an institution allows loans (such as TDA), that doesn't mean the plan sponsor has to choose to allow it in the plan.

You point is well taken, but I have seen far too many 401k loans with negative consequences. Adding up my negatives, I don't see it as a negative for Vanguard and Fidelity to not allow them.

renue74
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Re: Solo 401k - go with Vanguard or someone else

Post by renue74 » Fri Feb 19, 2016 11:51 am

The one thing, in general, with a solo 401(K)...is that if eventually you have business interests in various companies, the perks you have with this solo 401(K) would need to be conveyed to other employees in other businesses where you are a majority shareholder.

I own a small "C" Corp with 4 employees and am a member of 3 other small LLCs. The "C" corp has a SIMPLE IRA plan, which I max out each year.

Last year, I asked my accountant if I could open a solo 401(K) in one of my LLCs and stop participating in my C-Corp SIMPLE IRA. There's some type of IRS litmus test that indicates I would have to convey the same benefits to employees in my C-Corp. So I ended up not opening the solo.

Just a thought....if on down the road you have other business interests.

Dieharder
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Re: Solo 401k - go with Vanguard or someone else

Post by Dieharder » Fri Feb 19, 2016 2:10 pm

Thanks to all. I don't have an incoming rollover requirement, although it is nice to have, but not a deal breaker. I have former employer's 401k with excellent selection of funds and low ER and I can rollover my IRA into it if I ever need to. I do not need loan feature, and it is not something I look forward to needing. Paperwork initially sounds like slightly more for Vanguard but I can manage it. Also I think the 5500 EZ form is needed only after $250K in assets I believe and it will take some time to get there. Overall, then looks like no major issues?

JDDS
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Re: Solo 401k - go with Vanguard or someone else

Post by JDDS » Sat Feb 20, 2016 1:48 am

I am not aware of any more paperwork at Vanguard vs. other major providers. 5500-EZ filing requirements will be the same anywhere.

additional pros
- electronic contributions
- tracking of contributions employee traiditional or Roth deferrals vs. employer contributions

Disclosure: I have a Vanguard Individual 401(k)

J295
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Re: Solo 401k - go with Vanguard or someone else

Post by J295 » Sat Feb 20, 2016 8:14 am

My Fidelity solo 401k was quite simple to implement.
For more than 30 years I have found their support outstanding.
Funding for me is easy because we have accounts there and so funding is the click of a mouse.

Outside of the solo 401k context ......
We have some Vanguard accounts also.
In terms of customer support, the lack of 24 hour phone support is inconvenient for me at VG. No knocking VG, just sharing a personal preference.
I don't know if VG wires funds, but the few times we've had to do that out of Fidelity it has been one phone call and a fax for same day results.
This year I emailed Fidelity to tell them I wasn't being offered the free turbo tax when I logged in, they said they didn't know why that was and credited my account when I verified to them that I purchased the product (which was just me forwarding the online purchase screen).

cadreamer2015
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Re: Solo 401k - go with Vanguard or someone else

Post by cadreamer2015 » Sat Feb 20, 2016 9:55 am

I've opened a Vanguard solo 401(k) this year. I didn't find the paperwork onerous. They have people in their small business retirement unit who will answer any questions you have in filling the paperwork out. I really like that I can make a Roth 401(k) contribution.

I haven't done it yet (as I just set up the plan), but Vanguard told me that since I'm over 59 1/2 I can roll over amounts from my solo 401(k) plan at Vanguard to my Vanguard IRAs at any time. Would be interested in learning from others who may have done this if it is indeed possible, and if there were any complications in doing so.

It's true that Vanguard only lets you invest in their "Investor" class mutual funds. But I don't consider the 0.16% ER of the LifeStrategy fund I picked to be all that onerous. In a few years I will probably roll over the $ to my regular Vanguard IRAs and lower my ER by 5 or 6 bps.
De gustibus non est disputandum

CFM300
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Re: Solo 401k - go with Vanguard or someone else

Post by CFM300 » Sat Feb 20, 2016 11:27 am

My only experience is with Vanguard, so I'm not making a comparison, just some observations.

You don't administer a Vanguard solo 401(k) through your regular Vanguard log-in. You have to set up an new log in through their "small biz" website. That website is even clunkier than their regular website.

Plus, the small biz site does not send email confirmations of transactions the way the regular website does. So no email confirmation when you make your employER contribution. I thought I didn't have something set correctly, but a call to Vanguard confirmed that email confirmations are not sent.

Finally, there is no way that I can set my solo 401(k) information to be visible to my wife under her own log-in. I have done that with my IRAs, but such is not possible with solo 401(k)s. Again, that was confirmed by Vanguard.

danaht
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Re: Solo 401k - go with Vanguard or someone else

Post by danaht » Sat Feb 20, 2016 1:44 pm

I would go with Charles Schwab or Fidelity over Vanguard for a Solo 401k. I don't like Vanguard's limited investment options in their Solo 401k (ie no Vanguard ETFs, or Admiral Share Class Funds) The main down-side to Schwab or Fidelity is that you will have to use a manual check, or bill pay service to fund your 401k deposits. I drive to the Charles Schwab office once a month to deposit mine.

I have a Charles Schwab solo 401k and these are these Schwab commission free ETF funds (and expense ratios) that I invest in every month:
SCHB - broad US stock market - .03%
SCHE - emerging markets - .14%
SCHF - developed EX US markets - .08%

If I had a Fidelity Solo 401K - I would be investing in these Fidelity commission free ETF funds (and expense ratios):
ITOT - total US stock market - .03%
IEMG - emerging markets - .16%
IEFA - developed EX US markets - .12%

If I decided to give Vanguard more money and open a Vanguard Solo 401k - I would invest in these index funds (non-Admiral class):
VTSMX - total US stock market - .17%
VEIEX - emerging markets - .33%
VDVIX - developed EX US markets - .20%

You can see that in this case Vanguard is a lot more expensive than both Fidelity and Schwab. Some people say that the difference in these expense ratios are small - but if you'r putting $40,000 every year in this 401k - it will add up!

Dieharder
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Re: Solo 401k - go with Vanguard or someone else

Post by Dieharder » Sat Feb 20, 2016 8:28 pm

I have decided to look no further than Vanguard for my Individual 401k. From what I heard the cons are not something that matters to me very much, but the pros are. I am very familar with all Vanguard funds, and there is no need to learn the policies of another fund company, and when it comes to managing costs and my interests I trust Vanguard over any other company. I do not need too much hand holding or customer support, in fact during my 17 years with Vanguard I barely needed any. Just wanted to check when it came to solo 401k if there were some additional concerns, and so far sounds like none that is a deal breaker.

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JustinTime
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Re: Solo 401k - go with Vanguard or someone else

Post by JustinTime » Sun Feb 21, 2016 1:17 am

With Fidelity they allow the Advantage class funds around .05 or so ER.

Bfwolf
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Re: Solo 401k - go with Vanguard or someone else

Post by Bfwolf » Sun Feb 21, 2016 1:48 am

renue74 wrote:The one thing, in general, with a solo 401(K)...is that if eventually you have business interests in various companies, the perks you have with this solo 401(K) would need to be conveyed to other employees in other businesses where you are a majority shareholder.

I own a small "C" Corp with 4 employees and am a member of 3 other small LLCs. The "C" corp has a SIMPLE IRA plan, which I max out each year.

Last year, I asked my accountant if I could open a solo 401(K) in one of my LLCs and stop participating in my C-Corp SIMPLE IRA. There's some type of IRS litmus test that indicates I would have to convey the same benefits to employees in my C-Corp. So I ended up not opening the solo.

Just a thought....if on down the road you have other business interests.


What is the IRS rule that determines this? There was another thread where I suggested this strategy to somebody facing a similar situation, hope I didn't give them bad advice.

DanMacMan
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Re: Solo 401k - go with Vanguard or someone else

Post by DanMacMan » Sun Feb 21, 2016 7:39 am

Bfwolf wrote:
renue74 wrote:The one thing, in general, with a solo 401(K)...is that if eventually you have business interests in various companies, the perks you have with this solo 401(K) would need to be conveyed to other employees in other businesses where you are a majority shareholder.

I own a small "C" Corp with 4 employees and am a member of 3 other small LLCs. The "C" corp has a SIMPLE IRA plan, which I max out each year.

Last year, I asked my accountant if I could open a solo 401(K) in one of my LLCs and stop participating in my C-Corp SIMPLE IRA. There's some type of IRS litmus test that indicates I would have to convey the same benefits to employees in my C-Corp. So I ended up not opening the solo.

Just a thought....if on down the road you have other business interests.


What is the IRS rule that determines this? There was another thread where I suggested this strategy to somebody facing a similar situation, hope I didn't give them bad advice.


It's the controlled group issue. A person can't have a solo 491k if they are owner of a company with simple Ira plan.

I was asking those questions trying to structure a way to get maximum into 401k.

pingo
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Re: Solo 401k - go with Vanguard or someone else

Post by pingo » Sun Feb 21, 2016 9:51 am

cadreamer2015 wrote:It's true that Vanguard only lets you invest in their "Investor" class mutual funds. But I don't consider the 0.16% ER of the LifeStrategy fund I picked to be all that onerous. In a few years I will probably roll over the $ to my regular Vanguard IRAs and lower my ER by 5 or 6 bps.


We do not have an i401k, but for those of us who would use a Vanguard LifeStrategy/Target Retirement Fund anyway, there is zero disadvantage cost-wise to using a Vanguard i401k where the ERs are the same.
Last edited by pingo on Sun Feb 21, 2016 10:08 am, edited 2 times in total.

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Sun Feb 21, 2016 10:05 am

The controlled and affiliated service group rules actually make sense. The anti-discrimination rules are in place to intentionally prevent an owner or other highly compensated employees to disproportionally receive greater retirement plan tax benefits. You can argue with that, and I have been none too pleased when my contributions have been limited/reduced, one time even to 3.2%.

The reason for the controlled and affiliated service group rules is to prevent owners from shifting revenue to a shell company and gaining retirement plan benefits from that. Without these rules companies would shift highly profitable revenue streams to other entities. This allows them to not even offer a retirement plan from one company with employees and then have a plan at another company just for them to max out their benefits.

It is unfortunate, that in the case of a completely separate business you still get this rule applied. However, there is simply no way for the IRS to determine that this is a coincidence or a planned discrimination action.

Bfwolf
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Re: Solo 401k - go with Vanguard or someone else

Post by Bfwolf » Sun Feb 21, 2016 1:50 pm

Spirit Rider wrote:The controlled and affiliated service group rules actually make sense. The anti-discrimination rules are in place to intentionally prevent an owner or other highly compensated employees to disproportionally receive greater retirement plan tax benefits. You can argue with that, and I have been none too pleased when my contributions have been limited/reduced, one time even to 3.2%.

The reason for the controlled and affiliated service group rules is to prevent owners from shifting revenue to a shell company and gaining retirement plan benefits from that. Without these rules companies would shift highly profitable revenue streams to other entities. This allows them to not even offer a retirement plan from one company with employees and then have a plan at another company just for them to max out their benefits.

It is unfortunate, that in the case of a completely separate business you still get this rule applied. However, there is simply no way for the IRS to determine that this is a coincidence or a planned discrimination action.


This makes a lot of sense. Thank you for the explanation.

CajunDan
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Re: Solo 401k - go with Vanguard or someone else

Post by CajunDan » Wed Aug 10, 2016 8:04 pm

Dieharder wrote:Thanks to all. I don't have an incoming rollover requirement, although it is nice to have, but not a deal breaker. I have former employer's 401k with excellent selection of funds and low ER and I can rollover my IRA into it if I ever need to. I do not need loan feature, and it is not something I look forward to needing. Paperwork initially sounds like slightly more for Vanguard but I can manage it. Also I think the 5500 EZ form is needed only after $250K in assets I believe and it will take some time to get there. Overall, then looks like no major issues?


Suggest you rollover your former employer's 401k to your IRA ASAP. If the employer were to experience financial or legal troubles, it could be time consuming to extract your 401k funds.

sachagravett
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Re: Solo 401k - go with Vanguard or someone else

Post by sachagravett » Thu Apr 27, 2017 4:26 pm

I'm taking a different approach, available through Schwab and Fidelity. Will be using a Solo 401(k) Plan provided by a retirement consultant and will open a CRA (Company Retirement Account) at Schwab or Fidelity. In those accounts, I can get brokerage services and cash management, so I can invest in ETFs and use the cash management feature to do private lending when a good opportunity presents itself. Using https://401kcheckbook.com . Any comments on the strategy? Has anyone used it? Been doing research and seems very appealing to me. This approach doesn't seem to be available through Vanguard. Any experience with this? Thanks!

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Thu Apr 27, 2017 8:50 pm

Exactly what do you think you are going to accomplish with such an account that you can't accomplish with a standard one-participant 401k from Vanguard, Fidelity, Schwab, TD Ameritrade, etc...

Individuals who try to beat the market have a high likelihood of under performing the market. Especially those who think they can build a better mousetrap with alternative investments. Checkbook retirement plans are a solution in search of a problem that does not exist.

foodstamp
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Re: Solo 401k - go with Vanguard or someone else

Post by foodstamp » Thu Apr 27, 2017 10:51 pm

I have a solo 401k at fidelity and td ameritrade

TD has a Roth 401k and allows you to invest in equities. So there's no better place if you want a roth 401k (your income is too high for an IRA) and like to buy equities/ dividend stocks. There's nothing more glorious to have a portfolio cranking out dividends tax free in retirement.

Fidelity only has a standard 401k but they offer their funds & equities.

I don't have a Vanguard one but if I was just going with funds I think you can get a roth as well.

So it just depends on your goals + how you like to invest. If you want funds & roth then vanguard is a great way to go.

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Thu Apr 27, 2017 11:29 pm

foodstamp wrote:I have a solo 401k at fidelity and td ameritrade
IRS regulations generally only allow one 401k to be active per employer. Maybe you would like to explain this further.

sachagravett
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Re: Solo 401k - go with Vanguard or someone else

Post by sachagravett » Fri Apr 28, 2017 6:59 am

Spirit Rider, I have family, friends, and acquaintences that invest in real estate and are willing to take loans paying relatively high interest rates, secured by properties.
Seems that I can get market-beating returns without the volatility. If you think I'm just parroting nonsense that I found here, https://401kcheckbook.com/alternati ... vestments/, PLEASE let me know and clarify.

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Fri Apr 28, 2017 9:27 am

I'm not saying that it can't be done. I am just questioning the wisdom of doing so.

Real estate is a very volatile asset with long term returns that trail the market. It is only leverage that allows above market returns. Leverage is an amplifier that can be both positive and negative.

Real estate and lending are two of the biggest causes of prohibited transactions in self-directed retirement accounts. You are aware that prohibited transactions, disqualifies the entire retirement account and forces total distribution with the 10% penalty and taxable income on the entire balance.

You have to consider the custodians who promote self-directed retirement accounts as the same as whole-life insurance and fixed index annuity salespeople. They are masters at extolling the positives while using smoke and mirrors to obscure the negatives.

sachagravett
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Re: Solo 401k - go with Vanguard or someone else

Post by sachagravett » Fri Apr 28, 2017 11:59 am

Spirit Rider, the response is appreciated. Alas, you are correct that in nearly every interaction with financial salesmen, the operative term is caveat emptor. Recently, I've become the financial go-to person for some family and friends and it saddens me to see all those variable annuities, variable universal life policies, and non-traded REITs. On a few occasions they've told their financial "advisors" to discuss products with me and, frankly, the salespeople don't always fully comprehend what they're peddling.

Now that I've gotten all that off my chest, regarding self-directed and checkbook retirement accounts, I recognize that I have to be aware of the tax rules and that's something I'm ready to undertake. Also, don't know whether you've checked out the link I included in previous post, but seems my provider doesn't sweep the compliance piece under the rug: https://401kcheckbook.com/complianc ... nsactions/, https://401kcheckbook.com/complianc ... udfi-ubti/, https://401kcheckbook.com/complianc ... uirements/, and https://401kcheckbook.com/complianc ... vestments/ . If your knowledgeable about these rules and you think the full picture is not being presented, that would certainly give me reason to rethink this.

Nthomas
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Re: Solo 401k - go with Vanguard or someone else

Post by Nthomas » Fri Apr 28, 2017 2:42 pm

danaht wrote:I would go with Charles Schwab or Fidelity over Vanguard for a Solo 401k. I don't like Vanguard's limited investment options in their Solo 401k (ie no Vanguard ETFs, or Admiral Share Class Funds) The main down-side to Schwab or Fidelity is that you will have to use a manual check, or bill pay service to fund your 401k deposits. I drive to the Charles Schwab office once a month to deposit mine.

I have a Charles Schwab solo 401k and these are these Schwab commission free ETF funds (and expense ratios) that I invest in every month:
SCHB - broad US stock market - .03%
SCHE - emerging markets - .14%
SCHF - developed EX US markets - .08%

If I had a Fidelity Solo 401K - I would be investing in these Fidelity commission free ETF funds (and expense ratios):
ITOT - total US stock market - .03%
IEMG - emerging markets - .16%
IEFA - developed EX US markets - .12%

If I decided to give Vanguard more money and open a Vanguard Solo 401k - I would invest in these index funds (non-Admiral class):
VTSMX - total US stock market - .17%
VEIEX - emerging markets - .33%
VDVIX - developed EX US markets - .20%

You can see that in this case Vanguard is a lot more expensive than both Fidelity and Schwab. Some people say that the difference in these expense ratios are small - but if you'r putting $40,000 every year in this 401k - it will add up!
Actually with Schwab you don't have to mail in a check. You can do an online transfer from outside bank to a taxable Schwab brokerage account and then once it settles (3 days) call the Schwab small business line and they will transfer for you over the phone from taxable to your i401K. Very easy to open as well and customer service is excellent. All of the index mutual fund ERs now match the ETF's so no left over cash and easier for automatic investments.

SirOvlop
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Re: Solo 401k - go with Vanguard or someone else

Post by SirOvlop » Sat Apr 29, 2017 12:40 pm

radiowave wrote:You can move Rollover IRA funds into a Fidelity Solo 401K, it that is relevant to your situation.
this was the deciding factor in my case... rest of our retirement accounts are Vanguard... but being able to rollover into the fidelity solo401k enabled me to capitalize on the backdoor Roth which is definitely worth the minor inconvenience of maintaining an additional account.

expenses/fees for the fidelity advantage-class funds is on par w/ the admiral-class at Vanguard last time i checked.

radiowave
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Re: Solo 401k - go with Vanguard or someone else

Post by radiowave » Sat Apr 29, 2017 1:30 pm

+1 on all . . . that was my main reason for choosing Fidelity.
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mervinj7
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Re: Solo 401k - go with Vanguard or someone else

Post by mervinj7 » Sat Apr 29, 2017 3:34 pm

SirOvlop wrote:
radiowave wrote:You can move Rollover IRA funds into a Fidelity Solo 401K, it that is relevant to your situation.
this was the deciding factor in my case... rest of our retirement accounts are Vanguard... but being able to rollover into the fidelity solo401k enabled me to capitalize on the backdoor Roth which is definitely worth the minor inconvenience of maintaining an additional account.

expenses/fees for the fidelity advantage-class funds is on par w/ the admiral-class at Vanguard last time i checked.
Speaking of fees, vanguard doesn't allow admiral shares in their solo 401k. That, and allowing incoming rollovers make the Fidelity option suitable for many on this forum.

farnsy
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Re: Solo 401k - go with Vanguard or someone else

Post by farnsy » Sat Apr 29, 2017 7:28 pm

Dieharder wrote:I have decided to look no further than Vanguard for my Individual 401k. From what I heard the cons are not something that matters to me very much, but the pros are. I am very familar with all Vanguard funds, and there is no need to learn the policies of another fund company, and when it comes to managing costs and my interests I trust Vanguard over any other company. I do not need too much hand holding or customer support, in fact during my 17 years with Vanguard I barely needed any. Just wanted to check when it came to solo 401k if there were some additional concerns, and so far sounds like none that is a deal breaker.
The fact that Vanguard doesn't allow you to purchase admiral shares should probably matter to you. I'd never stand for that in my 401(k). Vanguard is general very careful to give customers the best deal, but their solo 401(k) is the exception. Your choice, of course.

Also note that the ability to roll into the Fidelity 401(k) will be necessary if you ever do roll your current 401(k) into an IRA and later want to do a backdoor Roth. If that's not on your radar, then maybe this doesn't matter.

danaht
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Re: Solo 401k - go with Vanguard or someone else

Post by danaht » Sat Apr 29, 2017 9:08 pm

Nthomas wrote:
Actually with Schwab you don't have to mail in a check. You can do an online transfer from outside bank to a taxable Schwab brokerage account and then once it settles (3 days) call the Schwab small business line and they will transfer for you over the phone from taxable to your i401K. Very easy to open as well and customer service is excellent. All of the index mutual fund ERs now match the ETF's so no left over cash and easier for automatic investments.
That's good to know Nthomas. I have a LLC (taxed as a s-corp) - so the business is not in my name. It looks like I would have to open a Schwab One Organization account for my business to do this. Looking at the Schwab documentation - there is a minimum deposit amount that is required for this type of business account. I'll need to call Schwab to get more information to see what the minimum deposit is - and if there is a penalty if the balance goes to 0. Did you open a Schwab One Organization account - or are you using a personal Schwab taxable account for this?

mikeb3408
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Re: Solo 401k - go with Vanguard or someone else

Post by mikeb3408 » Mon May 01, 2017 7:51 am

J295 wrote:My Fidelity solo 401k was quite simple to implement.
For more than 30 years I have found their support outstanding.
Funding for me is easy because we have accounts there and so funding is the click of a mouse.

Outside of the solo 401k context ......
We have some Vanguard accounts also.
In terms of customer support, the lack of 24 hour phone support is inconvenient for me at VG. No knocking VG, just sharing a personal preference.
I don't know if VG wires funds, but the few times we've had to do that out of Fidelity it has been one phone call and a fax for same day results.
This year I emailed Fidelity to tell them I wasn't being offered the free turbo tax when I logged in, they said they didn't know why that was and credited my account when I verified to them that I purchased the product (which was just me forwarding the online purchase screen).
I also have a Fidelity Solo 401k and the only way for me to fund it every month is either by going into a Fidelity Branch or mailing a check to them. How were you able to get it set up to fund electronically? They have told me this is not available for Solo 401k.

Any help is greatly appreciated!

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Mon May 01, 2017 11:29 am

mikeb3408 wrote:I also have a Fidelity Solo 401k and the only way for me to fund it every month is either by going into a Fidelity Branch or mailing a check to them. How were you able to get it set up to fund electronically? They have told me this is not available for Solo 401k.
You can not do a SE 401k contribution directly by ACH. However, you can open a Fidelity Cash Management Account (CMA) in the same name as the SE 401k employer. CMA ACH pull requests by 4pm ET will usually be in the account by the next morning. Call and request a SE 401k contribution from CMA account. Make investment.

Nthomas
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Re: Solo 401k - go with Vanguard or someone else

Post by Nthomas » Mon May 01, 2017 7:56 pm

danaht wrote:
Nthomas wrote:
Actually with Schwab you don't have to mail in a check. You can do an online transfer from outside bank to a taxable Schwab brokerage account and then once it settles (3 days) call the Schwab small business line and they will transfer for you over the phone from taxable to your i401K. Very easy to open as well and customer service is excellent. All of the index mutual fund ERs now match the ETF's so no left over cash and easier for automatic investments.
That's good to know Nthomas. I have a LLC (taxed as a s-corp) - so the business is not in my name. It looks like I would have to open a Schwab One Organization account for my business to do this. Looking at the Schwab documentation - there is a minimum deposit amount that is required for this type of business account. I'll need to call Schwab to get more information to see what the minimum deposit is - and if there is a penalty if the balance goes to 0. Did you open a Schwab One Organization account - or are you using a personal Schwab taxable account for this?
I have a personal Schwab taxable and i401k accounts. I just report as a sole proprietor. Good luck I hope it works out! They have been great for me. One last thing...you can roll over IRA to Schwab i401k as well which I will do when I start making back door Roth contributions.

Call them. They are always very helpful.

TIAX
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Re: Solo 401k - go with Vanguard or someone else

Post by TIAX » Sun Aug 27, 2017 8:52 pm

Spirit Rider wrote:
Fri Feb 19, 2016 10:16 am
Cons:
Vanguard does not allow incoming IRA rollovers
However, according to the Vanguard Solo 401(k) plan document (Section 3.07, Rollover contributions):
ROLLOVER CONTRIBUTIONS
Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect Rollover and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408, and 457(b)
Section 408 is of course the IRA section.

Section 3.08, Transfer contributions, does appear to limit transfers only to a "plan qualified under Code section 401(a)"

It seems then that as long as you perform a rollover, instead of a transfer (see here for difference), a Vanguard solo 401(k) would have to accept it. Is my understanding correct?

avalpert
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Re: Solo 401k - go with Vanguard or someone else

Post by avalpert » Sun Aug 27, 2017 9:21 pm

TIAX wrote:
Sun Aug 27, 2017 8:52 pm
Spirit Rider wrote:
Fri Feb 19, 2016 10:16 am
Cons:
Vanguard does not allow incoming IRA rollovers
However, according to the Vanguard Solo 401(k) plan document (Section 3.07, Rollover contributions):
ROLLOVER CONTRIBUTIONS
Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect Rollover and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408, and 457(b)
Section 408 is of course the IRA section.

Section 3.08, Transfer contributions, does appear to limit transfers only to a "plan qualified under Code section 401(a)"

It seems then that as long as you perform a rollover, instead of a transfer (see here for difference), a Vanguard solo 401(k) would have to accept it. Is my understanding correct?
The prototype plan documents they use don't prohibit them, but as the managers of the account Vanguard doesn't accept them and the plan does require you to use them for your account so, as employer, you have no way to accept them.

TIAX
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Re: Solo 401k - go with Vanguard or someone else

Post by TIAX » Sun Aug 27, 2017 10:46 pm

avalpert wrote:
Sun Aug 27, 2017 9:21 pm
The prototype plan documents they use don't prohibit them, but as the managers of the account Vanguard doesn't accept them and the plan does require you to use them for your account so, as employer, you have no way to accept them.
Thanks. Is this in writing somewhere?

TIAX
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Re: Solo 401k - go with Vanguard or someone else

Post by TIAX » Sun Aug 27, 2017 11:02 pm

Good post on thefinancebuff about this. I wonder if what Vanguard is doing is appropriate and, if not, perhaps someone should notify the IRS.

avalpert
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Re: Solo 401k - go with Vanguard or someone else

Post by avalpert » Sun Aug 27, 2017 11:15 pm

TIAX wrote:
Sun Aug 27, 2017 10:46 pm
avalpert wrote:
Sun Aug 27, 2017 9:21 pm
The prototype plan documents they use don't prohibit them, but as the managers of the account Vanguard doesn't accept them and the plan does require you to use them for your account so, as employer, you have no way to accept them.
Thanks. Is this in writing somewhere?
I don't know if they put it in writing when you set up the account - they have relayed this information to many orally as reported.

I don't see how there is anything illegal or inappropriate with what they are doing. They don't have any fiduciary responsibility to provide all possible services the plan could allow - if you want that full service you can pay them for a full-service 401k arrangement.

TIAX
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Re: Solo 401k - go with Vanguard or someone else

Post by TIAX » Sun Aug 27, 2017 11:42 pm

avalpert wrote:
Sun Aug 27, 2017 11:15 pm
TIAX wrote:
Sun Aug 27, 2017 10:46 pm
avalpert wrote:
Sun Aug 27, 2017 9:21 pm
The prototype plan documents they use don't prohibit them, but as the managers of the account Vanguard doesn't accept them and the plan does require you to use them for your account so, as employer, you have no way to accept them.
Thanks. Is this in writing somewhere?
I don't know if they put it in writing when you set up the account - they have relayed this information to many orally as reported.

I don't see how there is anything illegal or inappropriate with what they are doing. They don't have any fiduciary responsibility to provide all possible services the plan could allow - if you want that full service you can pay them for a full-service 401k arrangement.
The Plan Document does allow the rollover so I'm not sure why you're using the word could.

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Mon Aug 28, 2017 9:45 am

A 401k plan document specifies what the employer/administrator can/must allow. In a one-participant 401k, these are both you.

However, a custodian can have features/policies more restrictive than the plan document as long as they do not violate IRS regulations. Allowing other retirement plan assets to be rolled into a 401k is optional under IRS regulations. Vanguard chooses not to allow these in their Individual 401k

Another example. Fidelity's 401k plan document allows Roth 401k deferrals and employee after-tax contributions. These are both optional features under IRS regulations. Fidelity chooses not allow either of these in their Self-Employed 401k.

The one-participant 401k providers (Vanguard, Fidelity, TD Amerireadee, etc.) use their IRS approved Master and Prototype (M&P) plan document for both standard 401k plans and one-participant 401k plans. They then have different adoption agreements, allowed features and policies for one-participant 401k plans. They are violating no IRS regulation doing so.

You are free to change one-participant 401k providers at any time if you don't like their offering. If you can't find a mainstream provider with the investment options or features you want, you can use your own Third Party Administrator (TPA) and/or roll your own. You can then use the custodian of your choice for investment only accounts and use whatever features you plan document allows.

TIAX
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Re: Solo 401k - go with Vanguard or someone else

Post by TIAX » Mon Aug 28, 2017 12:00 pm

Spirit Rider wrote:
Mon Aug 28, 2017 9:45 am
The one-participant 401k providers (Vanguard, Fidelity, TD Amerireadee, etc.) use their IRS approved Master and Prototype (M&P) plan document for both standard 401k plans and one-participant 401k plans. They then have different adoption agreements, allowed features and policies for one-participant 401k plans. They are violating no IRS regulation doing so.
Thanks for the detailed explanation. However, I don't see these (or any other) restrictions in Vanguard's Adoption Agreement.

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Mon Aug 28, 2017 1:44 pm

TIAX wrote:
Mon Aug 28, 2017 12:00 pm
Spirit Rider wrote:
Mon Aug 28, 2017 9:45 am
The one-participant 401k providers (Vanguard, Fidelity, TD Amerireadee, etc.) use their IRS approved Master and Prototype (M&P) plan document for both standard 401k plans and one-participant 401k plans. They then have different adoption agreements, allowed features and policies for one-participant 401k plans. They are violating no IRS regulation doing so.
Thanks for the detailed explanation. However, I don't see these (or any other) restrictions in Vanguard's Adoption Agreement.
If you read my sentence again, I was referring to those three as separate items, not that the last two were incorporated into the first one.

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Re: Solo 401k - go with Vanguard or someone else

Post by tfb » Sun Oct 29, 2017 4:17 pm

Spirit Rider wrote:
Mon Aug 28, 2017 1:44 pm
TIAX wrote:
Mon Aug 28, 2017 12:00 pm
Spirit Rider wrote:
Mon Aug 28, 2017 9:45 am
The one-participant 401k providers (Vanguard, Fidelity, TD Amerireadee, etc.) use their IRS approved Master and Prototype (M&P) plan document for both standard 401k plans and one-participant 401k plans. They then have different adoption agreements, allowed features and policies for one-participant 401k plans. They are violating no IRS regulation doing so.
Thanks for the detailed explanation. However, I don't see these (or any other) restrictions in Vanguard's Adoption Agreement.
If you read my sentence again, I was referring to those three as separate items, not that the last two were incorporated into the first one.
The Plan Administrator isn't able to operate the plan as written in the plan document and the adoption agreement when the provider's allowed features and policies inhibit them. The Plan Administrator (i.e. the employer) should complain to the authorities.
Harry Sit, taking a break from the forums.

Stormbringer
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Re: Solo 401k - go with Vanguard or someone else

Post by Stormbringer » Sun Oct 29, 2017 5:02 pm

I have a Schwab Solo 401(k). I put my contributions in:

SCHB
SCHF
SCHZ
"Compound interest is the most powerful force in the universe." - Albert Einstein

DrGoogle2017
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Re: Solo 401k - go with Vanguard or someone else

Post by DrGoogle2017 » Sun Oct 29, 2017 6:25 pm

I have opened both Solo 401k and SEP IRa with Vanguard. No problem so far. It’s convenient because I have an IRA and Roth IRA with them.

Spirit Rider
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Re: Solo 401k - go with Vanguard or someone else

Post by Spirit Rider » Sun Oct 29, 2017 7:27 pm

DrGoogle2017 wrote:
Sun Oct 29, 2017 6:25 pm
I have opened both Solo 401k and SEP IRa with Vanguard. No problem so far. It’s convenient because I have an IRA and Roth IRA with them.
I just want to make sure you know that you can not make contributions to a Vanguard SEP IRA and a Vanguard Individual 401k for the same tax year.

DrGoogle2017
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Re: Solo 401k - go with Vanguard or someone else

Post by DrGoogle2017 » Sun Oct 29, 2017 7:29 pm

Spirit Rider wrote:
Sun Oct 29, 2017 7:27 pm
DrGoogle2017 wrote:
Sun Oct 29, 2017 6:25 pm
I have opened both Solo 401k and SEP IRa with Vanguard. No problem so far. It’s convenient because I have an IRA and Roth IRA with them.
I just want to make sure you know that you can not make contributions to a Vanguard SEP IRA and a Vanguard Individual 401k for the same tax year.
Yes, I meant SEP IRA for my daughter and Solo 401k for my husband. I was the administrator for both types of account.

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