Solo 401k at Wells Fargo

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jdilla1107
Posts: 596
Joined: Sun Jun 24, 2012 8:31 pm

Solo 401k at Wells Fargo

Post by jdilla1107 » Wed Sep 12, 2018 11:04 am

I just opened a solo 401k as a sole proprietorship at Wells Fargo and it didn't go as I expected. I asked them a bunch of followup questions and they didn't come off as super knowledgeable with regards to the mechanics. I can't tell if I am confused or they are.

As background, when I opened the account, I gave them two EINs. One for my business (myself) and one for my solo 401k plan.

What I expected:
I expected this to be work an IRA. I expected to end up with a single brokerage account that I could place employer and employee contributions into.

What I received:
I now have 3 new brokerage accounts:

1) S-Qualified Plan (no 1099R reporting) Sponsor
2) S-Qualified Plan (no 1099R reporting)
3) A sub account of #2 called a "Cash account".

I asked for an explanation and they said that #1 is a "shell account for reporting", #2 is the solo401k and, #3 is a sub account for cash transactions like with a debit card.

Questions:
- Do other solo 401k providers give multiple accounts like this?
- Any advice as to how to use these accounts or what exactly they are?
- What would I need a "cash account" or debit card for with a Solo 401k?

I haven't signed any of the paperwork and was looking for any experience from others about what this all means.

SelfEmployed123
Posts: 164
Joined: Sun Apr 15, 2018 8:57 pm

Re: Solo 401k at Wells Fargo

Post by SelfEmployed123 » Wed Sep 12, 2018 11:10 am

That sounds pretty confusing. I opened a solo 401k with Fidelity earlier this year. They have just one account for all contributions (employee and employer). Making contributions to the account are a bit of a pain. You have to do a bank transfer into a separate Fidelity Cash Management account, wait a week, then call their Small Business Retirement line and ask for the funds to be transferred into your account. However, the fund line up that is available to invest in is excellent. What funds will you have access to through Wells Fargo? Have you made contributions yet? It may not be too late to go with another custodian. Most people with Solo 401ks in this forum have their plan either through Vanguard, Fidelity, Charles Schwab, E*Trade, or TD Ameritrade. See this for more: https://thecollegeinvestor.com/18174/co ... k-options/

Spirit Rider
Posts: 8584
Joined: Fri Mar 02, 2007 2:39 pm

Re: Solo 401k at Wells Fargo

Post by Spirit Rider » Wed Sep 12, 2018 12:53 pm

A bigger question, is why would you possibly open this at Wells Fargo? Banks are for banking, not investing.

Last time I checked these were actually; re-marketed Oppenheimer Funds Single K or aPioneer Funds Uni-K plans. They only offered fairly high expense ratio active funds.

Do you even have lost cost (< 0.20% ER) index funds available?

niceguy7376
Posts: 2103
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Solo 401k at Wells Fargo

Post by niceguy7376 » Wed Sep 12, 2018 1:20 pm

Wish the OP who has been a memeber of this forum since 2012 read related posts before they went with Wells Fargo

I also dont understand when OP says " I gave them two EINs. One for my business (myself) and one for my solo 401k plan."

Are the EINS different?
Also what do you mean by "I expected this to be work an IRA"?

Fido or VG would be at a minimium 2 of top 3 choices recommended here.

jdilla1107
Posts: 596
Joined: Sun Jun 24, 2012 8:31 pm

Re: Solo 401k at Wells Fargo

Post by jdilla1107 » Wed Sep 12, 2018 1:53 pm

The Wells Fargo specifc comments are completely off base. It's a regular brokerage account (buy anything), I get 100 free trades per year per account, and pay no fees whatsoever. (This is apparently a grand fathered deal called "PMA" that is no longer offered.) I have been extremely happy with them for 15 years and have literally paid zero fees and zero commissions in that entire time. I mostly hold Vanguard funds at WF. WF also does several things with the mechanics of execution that are better than I have seen anywhere else.

I am looking for people's individual experience with the mechanics of Solo 401ks.
SelfEmployed123 wrote:
Wed Sep 12, 2018 11:10 am
You have to do a bank transfer into a separate Fidelity Cash Management account, wait a week, then call their Small Business Retirement line and ask for the funds to be transferred into your account.
Thanks for this. It sounds like the cash account mechanism is not unheard of.

TwstdSista
Posts: 984
Joined: Thu Nov 16, 2017 4:03 am

Re: Solo 401k at Wells Fargo

Post by TwstdSista » Wed Sep 12, 2018 2:59 pm

I have a solo 401k at Fidelity and it's just the one account. I mail my check in, it lands in a "core" fund (a money market fund of some sort) and I then buy mutual funds from there.

I have a brokerage account with them as well, but I like the funds to flow directly from my business account to my 401k, and not get mingled in with my personal accounts.

jdilla1107
Posts: 596
Joined: Sun Jun 24, 2012 8:31 pm

Re: Solo 401k at Wells Fargo

Post by jdilla1107 » Mon Sep 17, 2018 3:33 pm

I came back to answer part of my own question.

Some providers (Fidelity and Vanguard) are willing to act as the trustee for the Solo 401k. This means you only need to act as the "Employer"; thus one account. Some providers are not willing to act as the trustee (ie: Wells Fargo). This means at Wells Fargo, I am the trustee of my own plan as well as the employer. Thus the two accounts.

I am still unsure what the pros/cons of being my own trustee are and still haven't signed the account agreement. ;-) This is messy enough, I will likely just open a Vanguard Solo 401k instead.

MichCPA
Posts: 195
Joined: Fri Jul 06, 2018 9:06 pm

Re: Solo 401k at Wells Fargo

Post by MichCPA » Mon Sep 17, 2018 3:42 pm

So you are saying Wells Fargo opened more accounts than you expected? That's shocking!!

(Sorry, I couldn't resist)

In all seriousness, I would value the service aspects of Vanguard and Fidelity along with the cheaper funds over the free trades.

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