You did it! You set up your Solo 401k and your documents are ready… but now what?
Read on to learn next steps and best practices after you establish your Solo 401k with Nabers Group.
Step 1: Sign Your Plan Signature Pages
Setting up your Solo 401k with Nabers Group is easy. You can complete the application online, over the phone, or by sending us a signed application. The process will take you about 10 minutes or less.
Once you submit your application, we’ll have your Solo 401k documents prepared within just a couple hours. Your Solo 401k plan documents will be complete including:
- IRS Opinion Letter proving the qualified status of your 401k plan
- Trust tax ID number specifically assigned to your Solo 401k trust
- Basic Plan Document
- Adoption Agreement
- Appointment & Acceptance of Trustee
- Resolution of Board of Directors to adopt the Solo 401k plan
- Beneficiary Designation
- Death distribution forms
- Rollover acceptance form
- Trust agreement
- Summary Plan Description
- Loan Policy
- Life insurance policy
- In-plan Roth conversion notice and forms
- In-service distribution form
- Plan specifications document
- Required Minimum Distribution form
All in all, your Solo 401k plan and trust documents total well over 300 pages! To make things simple for you, we prepare a Signature Pages packet that’s ready for you to sign with all the documents extracted from the plan and trust that require your signature.
As soon as your documents are prepared, we’ll notify you via email. Then, you’ll log into your encrypted private Solo 401k portal and download, print and sign your signature pages.
There is no need to send any of the signed pages into us. Remember, you are you own plan administrator, so you are responsible for keeping great records of your Solo 401k documents, investments, transactions, and paperwork. Once your plan signature pages are signed, your Solo 401k is officially in existence and your next step is to open a depository account for your 401k money, and fund your plan via rollovers or contributions.
Step 2: Open Your Bank or Brokerage Account
As your own 401k trustee, you can decide where to hold your Solo 401k trust assets. Some accountholders will use a bank account, brokerage account or both.
You can open the trust bank account at your local bank- or hit the easy button and use the bank we’ve vetted and trained to open these specific types of accounts. Our trained bankers specialize in Solo 401k accounts and opening an account with them is a breeze. Because of our reputation and history in the industry, our preferred banks have no account minimums for our clients, and no monthly service fees!
If you’re interested in holding traditional equities, such as stocks and bonds in your Solo 401k trust, you may choose to open a brokerage account. Our Solo 401k Knowledge Base has hundreds of articles to assist you, including specific guides on opening brokerage accounts with every major brokerage firm. This way, if you have a favorite brokerage ecosystem, you can still have your Solo 401k open a brokerage account with that firm to continue buying equities. Most brokerage accounts who have an investment-only account for your Solo 401k trust will also provide a checkbook for you to use (with the checks written in the name of your Solo 401k plan).
Once you have your new bank or brokerage account open in the name of your Solo 401k trust, you have complete checkbook control.
Step 3: Rollover Funds
The Solo 401k by Nabers Group is an IRS-approved Qualified Retirement Plan. Each Solo 401k plan comes with an IRS Opinion Letter and a serial number, proving the qualified status of your plan.
Because the Solo 401k is a QRP (qualified retirement plan) in the eyes of the IRS, you can do a direct rollover (also known as a trustee to trustee transfer) from almost any other kind of retirement account including:
- Traditional IRAs
- Previous employer 401k plans
- Current employer 401k plans (if allowed – please ask your current employer)
- 403b plans
- TSP (thrift savings plans)
- KEOGH plans
- Defined Benefit Plans
- and more
Our proprietary software makes creating a rollover packet simple and fast. Simply log into your client dashboard and fill out the short rollover form. Our software will generate a rollover packet for you with complete directions to give to your current custodian.
The rollover packet includes all the necessary compliance to share with your previous custodian proving your Solo 401k is a qualified plan. This way, you can receive a direct rollover, without any taxable withholding. Our rollover packet will include a copy of the IRS Opinion letter proving the qualified status of your plan, and a sample 1099-R so your custodian can correctly complete the transfer as a direct rollover.
We never touch your money and you are in complete control. The instructions in your rollover packet will direct your old custodian to mail you a check, made payable to your new Solo 401k trust. Once you receive your rollover check(s) in the mail, deposit them into your new Solo 401k trust bank account.
Step 4: Make contributions
Once your bank account is open, you can start making contributions to your Solo 401k. Contributions to the 401k plan can be tax-deductible (if traditional contributions) or Roth (after-tax contributions).
The amount you can contribute is based on how much money your adopting employer (that’s your business connected to the Solo 401k) is making in “earned income”. If you have a sole proprietorship or single-member LLC, this is your net income (gross revenue minus expenses). If you have a multi-member LLC, LLC taxed as an S-corp, S-Corp or C-corp, this will be your compensation listed on your W2.
Determine your earned income to calculate your contributions.
Always work with your tax professional to confirm your contributions calculations are correct. A great way to get a head-start on how much you can contribute is to use our our Solo 401k contribution calculator.
Once you’ve determined your contribution amount, and checked that amount is correct with your tax preparer, complete a contribution form (downloaded from your 401k dashboard).
After you’ve completed your contribution form, deposit the funds into your Solo 401k bank account and file your contribution form in a safe place, or upload a copy to your secure 401k dashboard for later reference. You do not need to send a copy of the contribution form to Nabers Group as you are your own plan administrator. You can make your contribution by writing a check or sending a wire to your Solo 401k trust bank account.
Step 5: Start Investing!
Ah, finally the reward after setup! Now you can start investing in anything allowed by the IRS, including, but not limited to:
- Real Estate
- Precious Metals
- Private Equity
- Private Debt
- Bitcoin and other cryptocurrencies
- Other stock market related investments
- Private Lending
- Mortgage Notes
- Promissory Notes
- Tax Liens
- Tax Deeds
- and more!
Having complete checkbook control with the self-directed Solo 401k by Nabers Group makes it easy to close deals quickly. Let’s walk through an example of your Solo 401k purchasing a piece of property:
- Identify your property
- Send earnest money from Solo 401k trust bank account (write a check or send a wire)
- Sign the closing papers as Trustee (the property will be titled in the name of your Solo 401k trust, using your new trust tax ID number the Nabers Group EIN team obtains for you)
- Send funds to the closing table from your Solo 401k trust bank account (write a check or send a wire)