Application Instructions

Self-Directed Checkbook Solo 401k Plans for the Self-Employed

The application is not intended to be difficult or confusing, though you may have some questions that are not answered in the descriptions near the corresponding fields on the actual application form. That is what this page is for. These instructions follow the same order as the application, so if you have a question about the plan/trust name, (the most common questions) scroll down toward the bottom or hit control+F on your keyboard and search for the word “desired” if you are like us and hate searching manually.

Eligibility

Before getting started, you’ll need to confirm that you have some type of self-employment activity or a business in order to be eligible for the plan. This self-employment activity may be on a part time basis. It is also permissible to work a full time job in addition to your self-employment. Secondly, you will need to confirm that you do not have any full time non-owner W2 employees. Part time employees, 1099 independent contractors, a spouse, and other employees who are owners in the business are ok. For more information about eligibility see this blog post.

Section 1 – Trustee information:

This is where you will enter your personal information as the trustee (the person who will be in control of the plan).

Section 2 – Business information:

You will enter the basic information for your business or self-employment activity here.

The business name can be your full name if you have a sole proprietorship (this is the default business type if you have not formed an LLC, Corporation, etc.) and have not filed a DBA (doing business as) or fictitious name certificate. A lot of our plans are set up for sole proprietors using their personal name.

The business start date can be approximate and can be as recent as today. There is no minimum age for a business or self-employment activity to adopt a plan.

The business address may be the same as your address. If this is true, you may save time by clicking the “same as trustee address” checkbox.

Select your business form or type. If you do not have a formal LLC, Corporation, etc, you will select “Sole Proprietorship” to indicate you are a sole proprietor. If you have an LLC taxed as a Corporation, you will select “LLC.” You will then be asked to indicate how the LLC is taxed.

For state of formation, enter the state in which your business was formed. Sole proprietorships are formed by default in the state in which you reside and do business.

Enter your business EIN or employer identification number. This is the federal taxpayer ID for your business. If you have a sole proprietorship, perhaps you do not have an EIN and the taxpayer ID for your business is your social security number. If this is the case, enter your SSN here. Sometimes we need to obtain an EIN for your business if you do not already have one. If that is the case, we will discuss this with you and can often obtain this as a courtesy to you free of charge.

Enter your business fiscal year end. This is usually the same as the calendar year end of  12/31, however some corporations have opted for a different fiscal year end.

The NAICS code is a 6 digit code that corresponds to your type of business activity. If you know your NAICS code, enter it here. If you do not, please enter a brief description of what your business does so we may find the NAICS code for you.

Some people have an existing Solo 401k for the business that is adopting the new plan with us. In this case what we are doing here is restating the existing (most likely inferior, or shall we be nice and same more restrictive?) Solo 401k plan to our Solo 401k document system. If this is the case, please select “Yes” to indicate you have an existing Solo 401k for this business and we will create your Solo 401k restatement. Most people however, will enter “No”.

If you entered “Yes” for the existing Solo 401k fields, you will have 2 more fields to complete. Enter the effective date of your original Solo 401k plan. This can be found in your original plan documents. Please also enter the trust EIN for your original plan. We will use this with your restated Solo 401k plan as well. If your original plan provider did not obtain an EIN for your trust (some inferior more common Solo 401k plans don’t have EINs), you can leave this field blank or enter “N/A.” We will obtain an EIN for your new Solo 401k if your old plan does not have one.

Section 3 – Plan Information

If your spouse will participate in the plan, enter “Yes” and enter his or her full legal name and SSN (social security number). If not, you may enter “No” or if you are unmarried, “N/A” may be just the ticket for you.

Should my husband or wife participate?
Your spouse can participate in the plan if he or she performs work for the plan that would generate earned income. Don’t worry about your spouse being an “employee” for the purposes of eligibility, as even if he or she doesn’t have technical ownership of your company, spouses who are also employees are seen as owner-employees because of the marital relationship and thus, will not affect your eligibility. It may be helpful to know, that a spouse can participate later on if you two decide this is best and it does not even require a document update. If you have more questions about spousal participation, just give us a call and we’ll talk it over.

If you are married AND if your spouse will participate, you’ll want to decide if your spouse should also be a Solo 401k trustee (application question: will spouse be co-trustee). It’s up to you (and your spouse). A spouse can be added as a signer on bank accounts opened for the trust and generally have the same control over the funds as you if added as trustee. A trustee can be added or removed at any time and if you catch us on a good day, we’ll probably do the update for free, so keep that in mind too.

Desired Solo 401k plan/trust name:

We will create a 401k plan (the IRS-approved retirement documents that provide such valuable tax benefits) and a 401k trust (the entity that will hold your plan assets and provide the trustee(s) with checkbook control).

This plan/trust entity will have one name. Typically the plan/trust name is modeled after the business that is adopting the plan. So, for an S-Corp named ABC Consulting, Inc. the name might be as follows:

  • ABC Consulting 401k Trust

For a sole proprietor named Jane Doe the name might be as follows:

  • Jane Doe 401k Trust

That said, it does not have to follow that format and can be named almost anything. While we do suggest ending the name with the word “Trust“, other than that, it’s really up to you. Many people will leave “401k” out of the plan/trust name and that is an option as well. Keep in mind, this name will show on the checks you get from the bank and 401k assets will be titled in this name.

Section 4 – Credit Card Authorization Form

We collect the setup fee via credit or debit card payment which carries full fraud and consumer protection for you (not that you’ll need it here, but it’s there anyway).

For billing name, enter the name on the card you wish to use for payment.

For billing address, you may select “same as trustee address” or “same as business address to save time if either apply. Otherwise, select “other” and enter the billing address.

Select your card type. We accept Visa, Mastercard, AmEx, and Discover.

Enter your card number, expiration month, expiration year, and CVV (3 digit code on back or card or 4 digit code on front of AmEx cards.

Processing and Delivery Options:

Electronic delivery is free, secure, and immediate (once documents are complete).

Rush processing can be added if you need your documents significantly more quickly than our current processing times provide for. Contact us for details if your delivery is time sensitive. If you’re setting up in mid to late December and need your plan for this year, you may be looking at a rush fee to make the deadline.

Agree to the terms and sign to authorize your Solo 401k creation.
A couple notes on using the the electronic signature box: Click and drag in the shape of your signature with your mouse or trackpad. If you’re on a touchscreen device, this is even easier as you can just sign with your finger. If you’re not on a touchscreen device, take solace in the fact that everything you enter besides the signature is easier since you have an actual keyboard.

Finally, type any notes you’d like to send us (optional) and click Submit.

You will be taken to a confirmation page, sent an automated confirmation email, and then one of our team members will contact you via email regarding your expected electronic delivery date.