Explaination of the monthly 401k fees
The fee you pay covers your Solo 401k document maintenance.
Compared to an IRA, a Solo 401k is more powerful, provides many more advantages, and is different in how it is created and how it actually works. A 401k is created by a completely separate area of the tax code than are IRAs. A 401k is administered differently, too.
See the differences below:
IRAs vs. 401k plans
A self directed IRA must have a bank or trust company as custodian
- A Solo 401k does not require a custodian; Self-trustee allowed
An IRA is vulnerable to nationalization/confiscation
- A Solo 401k is protected from nationalization/confiscation
An IRA has a simple, short plan document (a few pages)
- A Solo 401k has an extensive plan document (hundreds of pages)
All IRAs are the same
- 401k plans vary according to plan documents
IRAs have normal functions/capabilities
- A Solo 401k has greatly expanded capabilities
An IRA has no required major document maintenance
- A Solo 401k has document maintenance required by IRS
- Document amendments required most years
- Complete document restatement required every few years
An IRA will incur Custodian maintenance fees, including: flat periodic maintenance fees, percentage-based maintenance fees, per-document safekeeping fees, per-asset record-keeping…
and Custodian transaction fees, including: asset purchase fees, asset sale fees, ACH fees, check cutting fees, wire transfer fees, cashier’s check fees, notary fees, distribution fees, conversion fees, etc.
- A Solo 401k has no custodian fees
A Self Directed IRA will incur LLC setup fees for checkbook control
- A Solo 401k does not require an LLC for checkbook control
A Self Directed IRA LLC will incur LLC maintenance fees: annual renewal fees, taxes, franchise fees, and annual reporting and/or tax returns for many states
Total costs of an IRA can quickly add up
- Total cost of a Solo 401k is much lower than Custodian IRA or IRA+LLC
As you can see from the chart above, and as you may know from our free education posts, articles and videos… the Solo 401k can be structured to be much more powerful than any IRA.
These extra powers (self-trustee, participant loan, higher tax-deductible contributions, etc) are made possible by careful preparation of the plan documents.
Here’s how a Solo 401k is different:
- Requires document maintenance
- Doesn’t require custodian
401k document maintenance fees are much lower than IRA custodian fees, and to make the 401k even more of a no-brainer, it eliminates all unnecessary transactional paperwork and delays.
This fee covers all required maintenance in its entirety. In this case, there is never an additional fee to provide any document updates that may be needed in the future to keep your plan up to date and IRS qualified.
You also have free access to our knowledge base to help with most issues, as well as access to our online ticket system for billing and technical support issues.
The knowledge base includes articles that cover many topics related to using and investing your Solo 401k plan. These articles can help you become more familiar with such topics and can be incredibly handy in bringing your professional advisors up to speed on your retirement plan.
Here’s what you DON’T get for the monthly maintenance fee:
- Interpretations of knowledge base articles
- Clarification of content within the knowledge base articles
- Examples of how the issues addressed in the knowledge base articles pertain to you and your plan specifically
This is because these are all needs for professional tax and/or legal advice, and the government says you must receive this advice from a CPA and/or attorney.