Longboat Retirement Solutions LLC

How Simple is it to Start a Solo 401k? – Part Two February 22, 2015

Filed under: Uncategorized — larsfforsberg @ 8:37 pm

What are some of the stumbling blocks clients encounter while getting their Solo 401k started?

The number one problem encountered by clients is slow moving custodians.  It is not in the best interest of custodians to help their customers close the IRA or 401k that the custodian manages.  Therefore, these custodians will take every opportunity to drag their feet and delay the client’s removal of their funds.  In other words, if you want action, you will need to encourage (agressively) your previous custodian.

I have personally seen these custodians send checks rather than wire – this causes a delay of up to 3 weeks!  I have seen custodians send the check to a person rather than financial institution – this causes an additional delay of a week or so.  And, recently, I saw a combination of the two; the custodian sent a check to our client, which caused a week delay, and the fact that they sent a check delayed the process by over three weeks!  This means that the custodian was able to claim that it held or managed these funds for an additional month.  That means money in their pocket.  These situations are extremely aggrevating for me, and unfair to the people who are trying to get their money back from these crooks.  I encourage all of our clients to really push for a wire to their newly opened Trust account.  This method puts money in clients’ account within days, not months.  If a custodian wants to charge you for the wire, I suggest that you raise hell.  If you are unable to get them to wire the money for free, I think it is worth paying the fee.

Stay tuned for Part Three, where we’ll discuss the other issues clients have had when opening a Solo 401k.

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