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Experience setting up a Solo 401k with Vanguard

Posted: Sat Nov 21, 2020 5:09 pm
by humblecoder
I wanted to post my experience (so far) in setting up a Solo 401k plan for my wife.

As background, my wife has a sole proprietor business (veterinary relief work). Thanks to reading this forum, I learned about the solo 401k, and it made sense to set one up for her in order to boost our tax advantaged space. After doing some research, we decided to open it with Vanguard. Yes, I know that there are some features that are not available with the Vanguard product, but they were not important to us. Also, we don't currently have an account with Vanguard, so it was a chance to give them a test drive with this account.

Anyway, the process started off pretty smoothly. We called them up to get started and they set up a login account for my wife to submit the application (login A). I liked that the form could be completed and Docusigned online without having to print a PDF and mail it in. I had noticed that other brokers required you to use the Postal Service. I have nothing against the USPS, but in this day and age, it seems pretty antiquated to me. Also, the person we spoke to on the phone was very helpful and answered a few questions that we had as we completed the form.

Anyway, once we submitted the form online, we had to wait a day for it to be processed. This is where things started to go off the rails.

We got an email saying that the account had been approved and that we can setup a login to manage the account. This seemed a little strange to me since we had already set up a login. However, a phone call to Vanguard confirmed that we actually need TWO accounts: one for the plan administrator (login B) and one for the plan participant. Given the my wife was both, I suppose this makes sense. Anyway, to set up the administrator account, you needed to go to the small business site and enter your SSN and plan number. We did both and it rejected it. I tried several times, both with my wife's SSN and her EIN (even though the instructions said to use the SSN, I figured I'd give it a whirl). Still no dice.

We called back Vanguard. Again they were very friendly, but this time they weren't very helpful. After bouncing to a couple of people, they finally discovered that when the set up the plan, they used the wrong SSN! We figured that mistakes happen and it could get fixed very easily. Nope. 3 to 5 business days. They said that when it was done, they would send a secure message to the login that she had used to complete the online forms (login A).

Well, when we tried to log into login A, the account was locked! It walked us through an online process to unlock the account. However, it asked for an account number. We didn't have an account number other than the plan number in the email. However, that didn't work. Another call to Vanguard!

This time they explained that the first account we created (login A) was just for accessing the Solo 401k online forms and that we needed to setup another account which would be my wife's plan participant login. This is now login C. So many logins!

While on the phone, I asked about the status of getting the plan administrator account (login B) straightened out. Still no progress, but the rep said that he would email when it was completed.

Anyway, it's been over a week since we started this process and the only thing we have to show for it are three accounts:
Login A - used to get to the online forms, but locked. Not a big deal since it sounds like we are never going to use this account again
Login B- the plan administrator account which still needs to be corrected by Vanguard
Login C- the account to be used for the plan participant. This seems to be setup and working

In fairness to Vanguard, it has been very easy to get them on the phone (no wait times) and everybody seems to be very friendly and tries to be helpful. I never try to "blame the messenger" when I talk to Customer Service Reps. They have no control over the bugs in the IT systems, so it is no use giving them a hard time.

Not sure if my story is normal or not, but it certainly does not bode well for doing further business with them.