IRA Financial Group and Charles Schwab have worked together to allow IRA Financial Group Solo 401(k) clients to establish a Checkbook Control Solo 401(k) Plan account with Charles Schwab with no custodian fees.
IRA Financial Group clients will be able to use IRA Financial Group’s IRS approved Self-Directed Solo 401(k) Plan and open the plan account at Charles Schwab, as well as other partners, such as Wells Fargo, Fidelity, and E-Trade. With IRA Financial Group’s Self-Directed Solo 401(k) Plan at Charles Schwab, you will be able to make traditional investments, such as stocks, as well as alternative asset investments, such as real estate, precious metals, hard money loans, tax liens, private business investments, and much more and incur NO custodian fees. IRA Financial Group’s IRS approved Solo 401(k) Plan is an open architecture trustee directed plan allowing you, as the trustee of the plan, to have Checkbook Control over your plan funds directly from your Charles Schwab account and incur no custodian fees.
The IRA Financial Group and Charles Schwab Difference
By working with IRA Financial Group and Charles Schwab to establish our Self-Directed Solo 401(k) Plan, you will gain the ability to make high annual 401(k) plan contributions, up to $56,000 ($62,000 if over the age of 50) in pre-tax, Roth, or after-tax, have a loan option, and gain the ability to make traditional as well as alternative asset investments, such as real estate. Whereas, if you adopted a Solo 401(k) Plan sponsored by Charles Schwab you would only be able to make pre-tax contributions, no Roth or after-tax contribution option, there would be no loan feature, and you would be only allowed to make traditional investments offered by Charles Schwab, such as mutual funds, and no real estate or other alternative asset investments would be permitted. So how is this possible?
With a Solo 401(k) Plan, the plan documents set forth the rules governing your Solo 401(k) Plan. IRA Financial Group’s Solo 401(k) Plan documents are open architecture trustee directed and not custodian directed giving you, as the trustee of the plan, Checkbook Control over the plan and its assets. IRA Financial Group would be the Solo 401(k) Plan document sponsor and Charles Schwab would be your 401(k)-plan custodian, giving you the power to have Checkbook Control over your plan assets and make traditional as well as alternative asset investments. Using IRA Financial Group’s plan documents will allow you to take advantage of a special type of non-prototype plan account offered by Charles Schwab.
Unlike an IRA, where the IRA custodian has specific IRS reporting requirements, with a 401(k) plan, the custodian (Charles Schwab) has no IRS reporting requirements, since you, as the plan administrator, would be responsible for any IRS reporting, such as filing the IRS Form 5500-EZ (if your plan assets are greater than $250,000). This is the reason Charles Schwab will allow you to open your Solo 401(k) Plan account with them and make alternative asset investments using a special type of non-prototype account and not with an IRA, since the 401(k)-plan custodian would have no IRS reporting requirements with a trustee directed Solo 401(k) Plan using IRA Financial Group plan documents.
Read More: Not All Solo 401(k) Plans are the Same
IRA Financial Group has developed a relationship with Charles Schwab in order to allow you to open a Self-Directed Checkbook Control Solo 401(k) Plan with no custodian fees. Your IRA Financial Group assigned retirement tax specialist will assist you in opening your new Self-Directed Solo 401(k) Plan at Charles Schwab or any other financial institution of your choice quickly. Using IRA Financial Group’s plan documents will allow you to take advantage of a special type of non-prototype 401(k) plan account offered by Charles Schwab allowing you to make traditional as well as alternative asset investments, such as real estate, as the trustee of the plan – with full Checkbook Control. The process for establishing a Self-Directed Solo 401(k) Plan with IRA Financial Group and Charles Schwab can be completed in days:
1. Complete a short New Client Intake Form allowing us to customize your IRS approved Self-Directed Solo 401(k) Plan to satisfy your retirement, investment, and tax needs.
2. Within 24 hours, your customized Self-Directed Solo 401(k) Plan will be drafted and sent to you for your review.
3. Your assigned retirement tax specialist will review the plan documents with you.
4. We will assist you in establishing your Self-Directed Solo 401(k) Plan with Charles Schwab or any other financial institution of your choice. In addition to Charles Schwab, IRA Financial Group has a relationship with Wells Fargo, Fidelity, and E-Trade.
5. Once your new Self-Directed Solo 401(k) Plan has been opened, we will assist you in making a contribution or rolling over existing retirement funds into the plan.
6. You are ready to take advantage of all the benefits your Self-Directed Solo 401(k) Plan has to offer, including making high annual contributions in pre-tax, Roth, or after-tax, borrowing up to $50,000, and making traditional as well as alternative asset investments, such as real estate, by simply writing a check or sending a wire from your new plan account.
High Annual Contribution Limits
While an IRA only allows a $6,000 contribution limit (with a $1,000 additional “catch up” contribution for those over age 50), the Solo 401(k) annual contribution limit is $61,000 for 2022 with an additional $6,500 catch-up contribution for those over age 50. In addition, if your spouse generates compensation from the business, he or she can also make high contributions to the plan.
For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $25,000. That amount can be made in pre-tax or after-tax (Roth). On the profit-sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $62,000.
A World of Investment Opportunities
By establishing a Solo 401(k) Plan with IRA Financial Group and opening the plan account with Charles Schwab, you will be able to invest in almost any type of investment opportunity that you discover, including real estate (rentals, foreclosures, raw land, tax liens etc.), private businesses, precious metals, hard money & peer to peer lending as well as stock and mutual funds; your only limit is your imagination. The income and gains from these investments will flow back into your Solo 401(k) Plan tax-free. Making an investment with your Solo 401(k) Plan is as simple as writing a check. As trustee of the Solo 401(k) Plan, you will have total control over your retirement assets to make real estate and other investments tax-free and without custodian consent.
Learn More: Investing in Alternative Assets
Loan Feature
While an IRA offers no participant loan feature, by establishing a Solo 401(k) Plan with IRA Financial Group and Charles Schwab, you will gain the ability to borrow up to $50,000 or 50% of the account value (whichever is less) for any purpose at a low interest rate. This offers a Solo 401(k) Plan participant the ability to access up to $50,000 for use for any purpose, including paying personal debt or funding a business.
“Checkbook Control” and No Custodian Fees
By establishing a Solo 401(k) Plan with IRA Financial Group and Charles Schwab, you can serve as trustee of the plan giving you “Checkbook Control” over the plan’s funds. To this end, making an investment with your Solo 401(k) Plan is as easy as writing a check. Another significant benefit of the Solo 401(k) Plan is that it does not require the participant to hire a bank or trust company to serve as trustee. This flexibility allows the participant to serve in the trustee role. This means that all assets of the 401(k) trust are under the sole authority of the Solo 401(k) participant. A Solo 401(k) Plan allows you to eliminate the expense and delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself. Also, because the Solo 401(k) Plan trust account can be opened at any local bank or credit union (i.e., Chase, Charles Schwab, Citibank, etc.), you will not be required to pay custodian fees for the account as you would in the case of an IRA.
Roth Type Contributions
With IRAs, those who earn high incomes are disallowed from contributing to a Roth IRA or converting their IRA to a Roth IRA. By establishing a Solo 401(k) Plan with IRA Financial Group and Charles Schwab, your Solo 401(k) Plan contains a built-in Roth sub-account which can be contributed to without any income restrictions. With a Roth Solo 401(k) sub-account, you can make Roth type contributions while having the ability to make significantly greater contributions than with an IRA.
After-Tax Contributions
By establishing a Solo 401(k) Plan with IRA Financial Group and Charles Schwab, you will be able to make after-tax contributions up to $61,000 (or $66,500 if over the age of 50). Unlike pre-tax employee deferral contributions, after-tax contributions can be made on a dollar-dollar basis and can be immediately converted to Roth without tax.
Cost Effective Administration
In general, the Solo 401(k) Plan is easy to operate. By establishing a Solo 401(k) Plan with IRA Financial Group and Charles Schwab, there is generally no annual filing requirement unless your Solo 401(k) Plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ).
Exemption from UDFI
When an IRA buys real estate that is leveraged with mortgage financing, it creates Unrelated Debt Financed Income (“UDFI”) – a type of Unrelated Business Taxable Income (also known as “UBTI or UBIT”) on which taxes must be paid. The UBTI tax is approximately 40% for 2018. But, with a Solo 401(k) Plan, you can use leverage without being subject to the UDFI rules and UBTI tax. By establishing a Solo 401(k) Plan with IRA Financial Group and Charles Schwab, you can buy real estate and use a non-recourse loan without triggering the UBTI tax. This exemption provides significant tax advantages for using a Solo 401(k) Plan versus an IRA to purchase real estate.
Work with the Leaders
The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP. IRA Financial Group is the market’s leading Self-Directed IRA and Solo 401(k) Plan provider. We have helped over 25,000 clients establish IRS compliant Self-Directed IRA and Solo 401(k) Plans and invest over $5 billion in alternative assets, such as real estate.
