Can a business have two separate Solo401k accounts?

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Topic Author
masonstone
Posts: 498
Joined: Thu Feb 01, 2018 4:01 pm

Can a business have two separate Solo401k accounts?

Post by masonstone » Fri Nov 15, 2019 11:11 am

Can my LLC have two solo401k accounts? I know the combined annual maximum contribution limit won't change, but can the two solo401k accounts exist at the same time. One being in Fidelity and the other at Vanguard?

Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: Can a business have two separate Solo401k accounts?

Post by Spirit Rider » Fri Nov 15, 2019 11:24 am

No.

A single business can not have more than one 401k plan covering the same employees.

Even if you had multiple businesses, the adoption agreements from E-Trade, Schwab, TD Ameritrade and Vanguard explicitly includes all controlled and affiliated service groups. Fidelity requires the affiliated employers to be identified.

Technically, a custom one-participant 401k plan could have more than one custodian. That would not make much sense, since such a plan could have designated Roth accounts at Fidelity.

Topic Author
masonstone
Posts: 498
Joined: Thu Feb 01, 2018 4:01 pm

Re: Can a business have two separate Solo401k accounts?

Post by masonstone » Fri Nov 15, 2019 11:30 am

Spirit Rider wrote:
Fri Nov 15, 2019 11:24 am
No.

A single business can not have more than one 401k plan covering the same employees.

Even if you had multiple businesses, the adoption agreements from E-Trade, Schwab, TD Ameritrade and Vanguard explicitly includes all controlled and affiliated service groups. Fidelity requires the affiliated employers to be identified.

Technically, a custom one-participant 401k plan could have more than one custodian. That would not make much sense, since such a plan could have designated Roth accounts at Fidelity.
Interesting, how does one open a new solo401k account with a different firm and roll-over the previous solo401k into the new solo401k if you can't have two open at the same time?

Spirit Rider
Posts: 11902
Joined: Fri Mar 02, 2007 2:39 pm

Re: Can a business have two separate Solo401k accounts?

Post by Spirit Rider » Fri Nov 15, 2019 11:41 am

masonstone wrote:
Fri Nov 15, 2019 11:30 am
Interesting, how does one open a new solo401k account with a different firm and roll-over the previous solo401k into the new solo401k if you can't have two open at the same time?
It is important to understand that a one-participant 401k plan is first and foremost a 401k plan. It is not bigger IRA-like accounts. The 401k plan is an entity and has a life of it's own.

To move to a new provider, you use the new one-participant 401k plan's amendment section of their adoption agreement to amend the plan to the new provider. You also open any accounts at that provider. Then you do trustee -> trustee transfers of any accounts from the old provider to the new provider. Finally, close the old provider's accounts. The 401k plan is now fully at the new provider

Topic Author
masonstone
Posts: 498
Joined: Thu Feb 01, 2018 4:01 pm

Re: Can a business have two separate Solo401k accounts?

Post by masonstone » Fri Nov 15, 2019 11:57 am

Spirit Rider wrote:
Fri Nov 15, 2019 11:41 am
masonstone wrote:
Fri Nov 15, 2019 11:30 am
Interesting, how does one open a new solo401k account with a different firm and roll-over the previous solo401k into the new solo401k if you can't have two open at the same time?
It is important to understand that a one-participant 401k plan is first and foremost a 401k plan. It is not bigger IRA-like accounts. The 401k plan is an entity and has a life of it's own.

To move to a new provider, you use the new one-participant 401k plan's amendment section of their adoption agreement to amend the plan to the new provider. You also open any accounts at that provider. Then you do trustee -> trustee transfers of any accounts from the old provider to the new provider. Finally, close the old provider's accounts. The 401k plan is now fully at the new provider
I see, thank you.

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