Investing in your retirement account is usually a can’t-go-wrong move. But if you’re running a business on the side while working a full-time job, where do you put those extra funds?
Or, if your side gig is now your full-time job (i.e., you’re a business owner), what retirement account options do you have?
There’s a sea of retirement account options to choose from. By going with a solo 401k, you’ll get some of the highest annual contribution limits, the ability to take a loan against your 401k, and plenty of investment options.
For that last one, you’ll a need self-administered 401k, which means finding a provider for that type of plan. MySolo401k is one of those providers. In this article, we’ll see what they have to offer for solo 401k account holders.
- Self-directed, solo 401k account provider
- Invest in more than stocks and bonds inside your solo 401k
- Costs more per year than most standard solo 401k accounts
Self-Directed Solo 401k
Who Is MySolo401k?
MySolo401k is a solo 401k plan provider (and SDIRA provider) that allows investing in alternative assets. It was started in 2009 and is based in Carlsbad, CA. Mark Nolan is the founder and Chief Operating Officer. MySolo401k has a 4.99/5 rating on the Better Business Bureau and no open complaints.
What Do They Offer?
MySolo401k offers self-administered solo 401k plans as well 401k Business Financing and IRA LLCs. In today's article, we'll reviewing its self-directed 401k plans.
Self-administered 401ks are different from fully-administered or brokerage Solo 401k plans. Fully-administered plans are offered by Schwab, Vanguard, Fidelity, and many other brokerages. And many of these plans are FREE.
If fully-administered solo 401k plans are often free, why would someone go with MySolo401k? To answer that question, let’s first go over what a solo 401k is.
What Is A Solo 401k?
A solo 401k is also called an individual 401k. Contributions to a solo 401k are tax-free. In this regard, it’s similar to a 401k that is offered by employers. Employees (W2 wage earners) contribute pre-tax money to their employer-sponsored 401k plan.
To contribute to a solo 401k, you must be a self-employed individual of an owner-only business. An owner-only business doesn’t have any employees. The business can have contractors but no W-2 wage earners or those with 1,000 or more hours per year working for the business. A big benefit of a solo 401k is that the owner’s spouse can work for the business.
With a solo 401k, you also have checkbook control. This means you can write checks directly from your 401k. The ability to write checks can be critical for any time-sensitive investments.
High Contribution Limits
A solo 401k has higher contribution limits than an IRA. For 2023, those limits are $66,000 total for the year or $73,500 if you are 50 or older.
The $66,000 breaks down into an employee (i.e., owner) maximum contribution of $22,500. Additionally, the business can contribute up to 25% of business revenues toward the employee’s 401k plan. For those 50 or older, a $7,500 catch contribution is available.
For example, imagine that a business made $100,000. The owner contributed $22,500 and the business contributed $25,000 (25% x $100,000) for a total of $47,500. The owner is 51 so the $7,500 catch contribution is also available, bringing the total contribution to $55,000.
Note that 401k contribution limits are combined across 401k plans. If you are still working a W2 full-time job and contributing to your employer-sponsored 401k, those contributions plus your solo 401k contributions are combined.
A popular feature of a Solo 401k is the participant loan. You’re able to borrow up to 50% of your solo 401k balance, not to exceed $50,000. The loan term is for five years or 30 if the money is used for a primary residence.
The loan is tax-free but be aware that you’ll be paying it back using taxed dollars. Also, if you allow the loan to lapse, you’ll incur a 10% penalty. Certainly, you want to be careful if you decide to borrow against your 401k.
With a Solo 401k, you can hold your equities pretty much anywhere. However, what we like about MySolo401k is that they allow you to setup your holdings at Fidelity and Schwab, two of the most popular traditional brokerage houses.
However, since you're using a Solo 401k plan, you don't need to follow "their" prototype rules. The account is simply held at these firms, but the rules your setup under your own plan are what apply. It's a great way to build a more flexible investment plan compared to what you'd have if you went through them directly.
Now we get back to our question from earlier — why go with MySolo401k? By going with a self-administered plan, you’re in full control. Mainly, this means you can invest in alternative assets such as real estate, private investments, gold, promissory notes, and other investment types that are not available from brokerages.
How Does MySolo401k Work?
Let’s say you have a solo 401k with Schwab. Stocks, ETFs, and bonds are the only investments available. You decide to set up a Solo 401k plan with MySolo401k. Instead of Schwab being your solo 401k plan provider, now MySolo401k is the plan provider.
Your funds remain at Schwab, but you get a new account (since it is a new plan). Also, you can still invest in the stocks, ETFs, and bonds offered by Schwab. But now, you have the flexibility to invest in alternative investments as well.
Are There Any Fees?
Yes, MySolo401k charges a one-time set up fee of $525. After year one, account holders pay an ongoing annual fee of $125.
The annual fee is to cover the updates required by the IRS to the plan documents, as well as for tax document filing (for any 1099-R or 5500-EZ).
Up to $499
IRA & 401k
IRA & 401k
How Do I Open An Account?
You can visit https://www.mysolo401k.net to open an account. MySolo401k walks you through the process of setting up your account and rolling funds into it.
Is My Money Safe?
Yes, your money is not on deposit with MySolo401k since they are not a custodian. Instead, your funds remain with your original broker of choice.
Is It Worth It?
If you want to go beyond stocks, ETFs, and bonds with your solo 401k, MySolo401k may certainly be worth it. Compared to other self-directed retirement account companies like Rocket Dollar and Alto IRA, MySolo401k's set up fee is a bit high; but you may pay less in ongoing fees.
If you're not interested in alternative investments, however, you'd be better off opening a solo 401k account with a traditional broker. Many of the best solo 401k providers charge no fees and offer a wide range range of investment options including stocks, mutual funds, ETFs, bonds, and more.
Self-Directed Solo 401k
Voluntary After-Tax Contributions
Virtually unlimited alternative investment options including:
Customer Service Number
Customer Service Hours
Mon-Sat, 7 AM – 5 PM (PT)
Customer Service Email
Mobile App Availability
Pricing and Fees
Products and Services
MySolo401k is a solo 401k provider that allows you to invest in alternative assets such as real estate, cryptocurrency, gold, and more.
- Opens the door to alternative investments in a Solo 401k
- Higher annual contribution limits than self-directed IRAs
- No minimum initial deposit requirement
- Ongoing fees are reasonable
- Setup fee is slightly above-average
- Strict eligibility criteria – must be a self-employed individual or owner-only business to qualify
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Editor: Clint Proctor Reviewed by: Claire Tak