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Solo 401(k) Owner/Spouses Only

Frequently Asked Questions:

Q: Do I Qualify To Set Up An Owner’s Only Solo 401(k)/Profit Sharing Plan (“SUPER K”)?

A: In order to set up an Owner’s Only Solo 401(k) (“SUPER K”), you must be a business owner and your business cannot have any employees other than you and your spouse.

Q: I Currently Have My Own Business Which Has A Few Employees; Can I Use This Business To Set Up A Solo 401(k)?

A: If your employees do not work more than 19.25 hours per week or 1,200 hours annually, your company may adopt a Solo 401(k). If your employees work more than 19.25 hours per week or 1,200 hours annually, your company may adopt a Group 401(k), please contact us on details of our Group 401(k) plan.

Q: My Business Is A Sole Proprietorship And I Am The Only Employee; Can I Use This Business To Adopt My Solo 401(k)?

A: Yes. For purposes of setting up a Solo 401(k), this is fine. However, for tax and legal liability purposes, you may want to consider another type of entity for your business, such as an S-Corporation.

Q: Can I Start A New Business To Set Up A Solo 401(k)?

A: Yes. We can help you start a new business and that new business will then adopt a Solo 401(k). One caveat is that your new business must be legitimate, in other words, the intent of setting up your business must be to earn profits and pay yourself wages.

Q: Can I Set Up a Solo 401(k) If I Have A 401(k)WithMy Current Employer?

A: Yes. You can have a 401(k) with your employer AND a Solo 401(k) for your own business.

Q: I Have An LLC That Invests In Rental Properties; Can I Use This Company To Adopt My Solo 401(k)?

A: Possibly. Ideally, a Solo 401(k) should be adopted by a company that is receiving ordinary/operational income rather than passive income such as rental income. A KKOS attorney will help you identify the pros and cons of this setup.

Q: How Much Can I Rollover Into My Solo 401(k)?

A: There are no minimum or maximum rollover amounts into your Solo 401(k).

Q: What Are The Requirements To Rollover An Existing Retirement Account Into My Solo 401(k)?

A: You can rollover almost every retirement account without penalty into your Solo 401(k) (traditional IRAs, prior employer 401(k)’s or 403(b) plans, etc.). A KKOS attorney will help you with your specific situation.

Q: Are There Minimum Contribution Requirements Into My Solo 401(k)?

A: It is possible for your Solo 401(k) account balance to consist of only your rollover amount. However, you should have a legitimate intent to contribute to your Solo 401(k) as the employee and the employer. The annual maximum employee contribution is $18K per year with a total overall annual contribution maximum of $53K (both employer and employee).

Q: How Is A Solo 401(k) Different Than A Self-Directed IRA?

A: A Solo 401(k) is different than a Self-Directed IRA in that the custodian of a Self-Directed IRA must be a third-party company, whereas the custodian/trustee of a Solo 401(k) can be you. This gives you much more authority and control over your Solo 401(k) than a Self-Directed IRA. Second, a Solo 401(k) can be leveraged with debt without being subject to certain debt-related taxes which typically apply to a Self- Directed IRA. Third, a Solo 401(k) allows greater annual contribution amounts than a Self-Directed IRA. For example, a Solo 401(k) can receive contributions from you as the employee up to $18k per year and from you as the employer up to 25% of your employee compensation. Fourth, you can borrow money from your Solo 401(k) up to 50% of the account balance, up to $50,000.00 maximum. You can’t do that with a Self-Directed IRA. Fifth, if your Solo 401(k) engages in certain prohibited transactions, the consequences are much less severe than if a Self-Directed IRA were to engage in the same prohibited transaction. Other than that, the Solo 401(k) is very similar to the Self-Directed IRA in that both may be used to invest into alternative assets such as real estate, LLCs, precious metals, and private companies. Second, your Solo 401(k) is subject to the same set of prohibited transaction rules as a Self-Directed IRA. Third, you can invest your Solo 401(k) into an LLC for asset protection purposes (401(k) LLC), just like a Self-Directed IRA LLC. In most circumstances, that is something we would recommend.

Q: Can I Pay For My Solo 401(k) Out Of My Current 401(k)?

A: Yes. We will begin preparing documents for your Solo 401(k) when we receive full payment. The purchase of a Solo 401(k) is a company expense, so in general, the adopting company would send payment for your Solo 401(k). If this is not possible, you may pay for your Solo 401(k) with personal funds which can be reimbursed by your company.

Q: How Do I Execute A Loan From My Solo 401(k)?

A: After you purchase a Solo 401(k) we will mail you a binder with specific participant loan requirements for a loan to maintain compliance of your Solo 401(k). As an Additional Service, Navigator may prepare the necessary documents to process a loan for a fee of $250.

Q: Who Is The Custodian?

A: There is no Third Party Administrator or Custodian. You act as the Administrator/Trustee of the Solo 401(k). Navigator nor KKOS Lawyers will act as the TPA or Custodian.

Q: What Is Included In The Annual Maintenance Plan (“AMP”)?

A: As the administrator, you are required to maintain proper records for your Solo 401(k). The Annual Maintenance Program assists you with recordkeeping (asset tracking), recognizing if your Solo 401(k) needs to file forms with the IRS or Department of Labor, and keeps your Solo 401(k) up-to-date with IRS amendments and updates.

Q: What Is Included In My One Hour ConsultWith The Solo 401(k) Purchase?

A: Initial set-up, 401(k) rules, self-directed investment legal advice, rollovers, contributions and anything pertaining to the set-up of your Solo 401(k).

Q: What Additional Fees May Be Incurred After Establishing My Solo 401(k)?

A: Additional Services are outlined on our website and included in your binder upon purchase of a Solo 401(k). Navigator will provide information and forms for some services for which you may opt to execute on your own. However, you may still request Navigator to professionally execute any Additional Service.

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