401k rollover for self-employed?

[Daleth]

Hello Mustachians,
I am finally getting around to considering what to do with the 401k I had at a previous employer, now that I'm self employed. That 401k is at Fidelity. I am planning to open a self-employed 401k. So, my question is whether to switch brokerages (i.e. open the self-employed one elsewhere and then roll over to there).

Is Fidelity good or is there a better one you would recommend?

[bacchi]

When I had one at Fido, they still required snail mail contributions. Yes, seriously, a check and a filled out form.

This was only a few years ago but verify that they've made it into the 2000s.

[terran]

Not all solo 401(k) allow incoming rollovers. Fidelity does, but thy don't allow Roth contributions and as bacchi says they require mailed in contributions (as of two years ago at least). There is a way around that with a taxable account opened in the businesses name and calling in, but I never availed myself of it.

I would suggest opening one at E*trade which also allows incoming rollover, but allows Roth contributions. They also have a number of Vanguard funds that trade commission free and the usual slate of ETFs.

The reason I mention Roth is that Roth solo 401(k) contributions don't reduce the Qualified Business Income deduction while traditional do, which creates the unusual circumstance of one type of traditional contribution (solo 401(k)) being worse than another (IRA). Traditional solo 401(k) contributions might still be worth it despite the reduced tax savings, but it's nice to have the option of Roth.

[cool7hand]

We like Schwab and have rolled over our former 401ks there. The fees are low. They offer their own low-fee index funds, plus those from other vendors including Vanguard (and I think Fidelity as well). We found a local branch office advisor who is pretty sophisticated and gets our goals. He helped us kick the tires on whether to use insurance products to max out my wife's pension. He's also helping us run the numbers on 72t distributions. As I recall, you get three wire transfers a quarter, which is nice if the need ever arrives. We also linked our credit cards and my wife's 457, which we can't transfer, so we can see our complete financial picture in one place.

[wudged]

Not all solo 401(k) allow incoming rollovers. Fidelity does, but thy don't allow Roth contributions and as bacchi says they require mailed in contributions (as of two years ago at least). There is a way around that with a taxable account opened in the businesses name and calling in, but I never availed myself of it.

You can also just send a bill pay to Fidelity with your account number. You might want to see this thread about setting up solo 401k for doing mega backdoor roth https://forum.mrmoneymustache.com/taxes/anyone-execute-a-mega-backdoor-roth-in-solo-401k/

[Daleth]

This is great info, thanks so much.

Do any of you have experience with solo 401k's that allow loans? In other words, loans from your 401k, which you pay back to yourself? Asking because we invest in real estate, and it would be nice to know that if a great investment opportunity came up, the cash would be available. I saw one solo 401k place that said it did loans, but it's not a big-name brokerage at all (https://www.solo401k.com/welcome). I'd rather go with a known entity.

[terran]

E*trade allows loans, but I haven't taken one so I don't know anything more.

[cool7hand]

This is great info, thanks so much.

Do any of you have experience with solo 401k's that allow loans? In other words, loans from your 401k, which you pay back to yourself? Asking because we invest in real estate, and it would be nice to know that if a great investment opportunity came up, the cash would be available. I saw one solo 401k place that said it did loans, but it's not a big-name brokerage at all (https://www.solo401k.com/welcome). I'd rather go with a known entity.

You might want to research how 401k loans impact the ability of your stash to grow. You might not get the results you want this way.

[Queen Frugal]

I would suggest opening one at E*trade which also allows incoming rollover, but allows Roth contributions. They also have a number of Vanguard funds that trade commission free and the usual slate of ETFs.

I always enjoy terran's posts but I just have to pipe up and say I can't stand E*Trade. Perhaps the pandemic just really messed them up but I opened a solo Roth 401k with them last year and they could not get the beneficiaries correct. The customer service is horrible. They would send me letters saying I needed to contact them right away about the beneficiaries, I'd call, I'd wait on hold for 45 minutes, and then every single time the person had no idea how to fix the problem. I bet I spent 8 hours on hold at least.  I gave up after a year and still the problem had not been fixed and I moved the money. This wasn't a complicated issue - it was just naming a trust as a beneficiary. Most institutions have a policy on how they want trust beneficiaries handled, which is fine, but E*Trade was just chaos. I have no idea what their policy is, and neither do they. E*Trade was a complete failure on the customer service front.

On paper, E*Trade has great products.