Setting up a Self-Directed 401k

Setting up a self-directed 401(k) may seem like an intimidating process. We’ve worked with many clients who are convinced of the self-directed 401(k)’s benefits, but aren’t quite sure where to get started. These four steps can help you get started. Today, we’ll cover the basics of setting up a self-directed 401(k) and throw in some tips on streamlining the administrative process.

Understanding Self-Directed 401(k) Eligibility Requirements

In most cases, we see individuals qualify for a self-directed 401(k) by meeting self-employment requirements. We’ve broken down these requirements into three parts:

Part 1: Perform Self-Employment Work<

This can be part-time work at the minimum or even moonlighting work done in conjunction with a full-time job. In fact, you can have a separate retirement plan with your full-time employer and also open a self-directed 401(k) under your self-employment work. Having two separate retirement plans or completing a plan rollover can be an overwhelming task. We can help you go over your options and set up a plan that fits your retirement needs.

Part 2: Operate a Qualifying Self-Employment Business

Here are the qualifying business types:

Part 3: Don’t Employ Any Full-Time Employees

A full-time employee works over 1,000 hours per year. However, a spouse who works over the 1,000 hours is excluded.

Meet Solo 401(k) Enrollment Deadlines

If you’re already considering a solo 401(k), plan ahead. The enrollment deadline is December 31. You’ll want to become familiar with the solo 401(k) adoption agreement document beforehand. Remember you’ll have to not only execute this establishing document, but also set up a checking account for your solo 401(k) investments.

Understand Investment Responsibilities

Unlike the traditional mutual funds found in employer sponsored 401(k) plans, a self-directed 401(k) plan requires more active investing. If you choose to invest in stocks, be prepared to babysit them.

Set-up a Self-Directed 401(k) with Checkbook Control

As you can see, setting up a self-directed 401(k) requires a few important steps. While we can’t research, pick and monitor your investments, we can streamline the process. We can set up a self-directed 401(k) plan and establish checkbook control on our secure platform. We specialize in private, high yield investments. Reach out today for your consultation.