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Share your Solo 401k experiences with the noob!
Hey there self-employed SDers!
I've been remiss with our finances, so decided to start getting everything caught up before the end of year. So here's the thing, hubby recently began working as a full-time contractor, so he doesn't have a group retirement plan. I'm running the numbers, and I don't think that he'll make enough in order to be able to max out a SEP-IRA, so I think that we're going to be opening up a Solo 401k/Self-Directed 401k so we can try to max out on contributions. According to this calculator [irafinancialgroup.com], looks like we'd need to have at least $259,000 in order to max out contributions of $50,000 for a SEP-IRA for 2012, and he could earn much less than that in order to be able to max out a Solo 401k
So here's where the questions come in:
1) Do you need a separate ITIN to set one of these plans up? It looks like this is the case, but not quite sure.
2) Can you get a spouse in on the profit sharing contribution too? Meaning, if he has an account set up, can I set up an account too, and have a profit sharing portion of the business set up since I already have a retirement plan under my current employer which would take care of my employee contribution.
3) I've been reading about the loveliness of a Solo 401k plan where he can be the Trustee of the account. (link [solo401k.com]) Do any of you have one that's set up like this, and is it really that amazingly stupendous? I'm a pretty lazy investor, and mostly inclined to go with Vanguard or Fidelity, but was just wondering how much extra activity you put into these things in order to justify setting up something with this Trustee option.
4) The Form 5500 that you have to file annually after assets grow over $250k. This is way down the line, and it's something that you don't have to do with a SEP-IRA. How tough is it to file yourself? I hate the idea of giving someone $300 to do it. I also saw that if you file a paper Form 5500-EZ, that has the potential of being public info.
But at least e-filing using the EFAST2 system is private, and hopefully, free.
5) If you use Vanguard or Fidelity for your Solo 401k, did you like one over the other?
Thanks for any insight that you can provide. I really appreciate it!
I've been remiss with our finances, so decided to start getting everything caught up before the end of year. So here's the thing, hubby recently began working as a full-time contractor, so he doesn't have a group retirement plan. I'm running the numbers, and I don't think that he'll make enough in order to be able to max out a SEP-IRA, so I think that we're going to be opening up a Solo 401k/Self-Directed 401k so we can try to max out on contributions. According to this calculator [irafinancialgroup.com], looks like we'd need to have at least $259,000 in order to max out contributions of $50,000 for a SEP-IRA for 2012, and he could earn much less than that in order to be able to max out a Solo 401k
So here's where the questions come in:
1) Do you need a separate ITIN to set one of these plans up? It looks like this is the case, but not quite sure.
2) Can you get a spouse in on the profit sharing contribution too? Meaning, if he has an account set up, can I set up an account too, and have a profit sharing portion of the business set up since I already have a retirement plan under my current employer which would take care of my employee contribution.
3) I've been reading about the loveliness of a Solo 401k plan where he can be the Trustee of the account. (link [solo401k.com]) Do any of you have one that's set up like this, and is it really that amazingly stupendous? I'm a pretty lazy investor, and mostly inclined to go with Vanguard or Fidelity, but was just wondering how much extra activity you put into these things in order to justify setting up something with this Trustee option.
4) The Form 5500 that you have to file annually after assets grow over $250k. This is way down the line, and it's something that you don't have to do with a SEP-IRA. How tough is it to file yourself? I hate the idea of giving someone $300 to do it. I also saw that if you file a paper Form 5500-EZ, that has the potential of being public info.
But at least e-filing using the EFAST2 system is private, and hopefully, free.5) If you use Vanguard or Fidelity for your Solo 401k, did you like one over the other?
Thanks for any insight that you can provide. I really appreciate it!
Last edited by FannySpread; 10-23-2012 at 11:22 AM..
