Best way to contribute to Fidelity i401k

[Creditcardguy]

Hello!
Recently set up with Fidelity and 3 fund portfolio. I’m going to contribute $56000 yr to my self employed 401k for the foreseeable future. So far, I’ve had to mail them a check and wait for it to clear. Takes too long and that money makes diddly for a week. I’d like to do $5000 a month and just transfer it somehow. My “emergency fund” is in a Capital One mm account @ 2%. Can I get a Fidelity mm and transfer straight from there? Any other ideas?
Thank you,
CCG

PS - is it better to do $5000mth versus $15000qtr versus $56000 in January?

[nolesrule]

Your diddly of not earning anything for a week comes to about $25. I wouldn't be that concerned.

[Creditcardguy]

Your diddly of not earning anything for a week comes to about $25. I wouldn't be that concerned.

I’m sorry, I thought this was Bogleheads.org!!

I just think sending a check every month is a bit of a pain, and I don’t like the time lag. There must be a better way.

[damege]

You can do an electronic transfer to a fidelity checking account, then call to txfer to the solo401k. Takes like 2-3 days.

[HomeStretch]

I make i401k contributions by check at my local Fidelity office. Takes a couple minutes for the front desk to process the contribution. Funds are available to invest by end of business day or latest the morning of the following business day.

[lakpr]

If you have the wherewithal to contribute the full $56k to the Solo-401k plan, I'd advise you to do that. Research has shown that there is a 66% chance (2 out of 3) that lump sum investing wins out over dollar cost averaging. Not many can swing all $56k at once.

Of course, you need to show that you have at least $56k income AFTER subtracting the self employment taxes, but I assume you know that.

[leeks]

Yes, you can transfer from another Fidelity account but you have to call.

[Creditcardguy]

Thanks all. Looks like a Cash Management Account is what I need. Closest office is 6 hours away, or that would be perfect.

[StrongLikeBuLL]

I have my own business too and I have Simple IRA thru Fidelity. I make deposits to my qualified employees using Fidelity's Plan Manager, my business checking account is linked to it. I just go on it select an employee then just enter an amount and hit send and it'll electronically deposit the funds into their fidelity account. I assume you have that option too since they're both small business retirement accounts. I would call and ask ask about plan manager if I were you.

[Creditcardguy]

I have my own business too and I have Simple IRA thru Fidelity. I make deposits to my qualified employees using Fidelity's Plan Manager, my business checking account is linked to it. I just go on it select an employee then just enter an amount and hit send and it'll electronically deposit the funds into their fidelity account. I assume you have that option too since they're both small business retirement accounts. I would call and ask ask about plan manager if I were you.

I'll look into it. It's only my wife and I, and our business portion of the self employed 401k is only $7500 each, which I've already contributed this year. The personal side is $22500 (Me) and $18500 (wife), but I think the Plan Manager is only for the employee side. Good info though.

[squidfather]

I've had mixed experiences with this. I have a Fidelity CMA and brokerage account, and I tried calling in to make the transfer to my i401k but they told me they couldn't do it over the phone, and I'd have to mail a check or bring a form to an office.

I then brought a signed form to the office and they were able to then transfer from the brokerage to my i401k. The problem was that my wife has a separate i401k, and even though I brought in a signed form for her, they wouldn't transfer for her unless she physically appeared and requested it.

We ended up mailing a check. My plan is to do this quarterly moving forward, but it's still annoying. Moreso because I'm dealing with small sums, as we both use 403b at work, and are just depositing the 20% of net profit - SE tax into the i401ks for relatively small side businesses.

[Spirit Rider]

If you have the wherewithal to contribute the full $56k to the Solo-401k plan, I'd advise you to do that. Research has shown that there is a 66% chance (2 out of 3) that lump sum investing wins out over dollar cost averaging. Not many can swing all $56k at once.

A 401k is not just a bigger IRA where the timing of contributions does not matter. You can not just make contributions whenever you want. There are very specific IRS 401k regulations regarding the timing of employee elective contributions.

Employee elective contributions can be up to 100% of compensation. However, they are only allowed when "contributions are made after the employee's performance of service with respect to which the contributions are made (or when the cash or other taxable benefit would be currently available, if earlier)."

You must have W-2 compensation or self-employed earned income (business profit - 1/2 SE tax) to make employee elective contributions.

Employer contributions can be made at anytime. However, employer contributions to a 401k during the tax year can NOT be returned, are subject to a 10% excise tax until abated by future employer contribution space. This is a 401k plan error that must be corrected under the IRS Employee Plans Compliance Resolution System (EPCRS).

You might think you know what your earned income will be for the year, but it is really an unnecessary risk. An S-Corp is pretty easy. Whenever you run payroll make an employer contribution = 25% of your wages.

For the self employed, I suggest you be conservative. Make quarterly contributions of 90% of the 20% employer contribution on the same earned income used for your estimated taxes. Make the contributions after the close of the quarter, I.e. 4/15, 6/15, 9/15 and 1/15 of the next year. At no time are you likely to have made an excess employer contribution during the tax year.

Since the fourth quarter's contribution is in the next year. If you have some major problem, some or all of it can be reallocated to that tax year simply by not taking a deduction for the prior year. However, if your estimates are accurate, you will just have about 10% to contribute at tax time.

Of course, you need to show that you have at least $56k income AFTER subtracting the self employment taxes, but I assume you know that.

You need far more than $56K in earned income to make the maximum employee + employer annual additions to a Fidelity SE401k.

An S-Corp shareholder-employee maximizing their employee elective contribution needs $56K - $19K = $37K) / 25% = $148K in W-2 wages + $37K in remaining business profits. If they are only making employer contribution, they need $56K / 25% = $224K in W-2 wages + $56K in remaining business profits.

A self-employed individual maximizing their employee elective contribution needs $56K - $19K = $37K) / 20% = $185K in earned income. If they are only making employer contribution, they need $56K / 20% = $280K in earned income.

[Ferdinand2014]

I have wifes IRA, my SEP, Brokerage accounts and 529's at Fido. My SEP I just use the Fido app on my phone and snap a picture of the check from my business checking account. Ready for investing by the end of the day. My other accounts I just have set up automatic transfers from my personal checking accounts linked to Fido. for monthly contributions. All available within 1 business day for investing.

[Ferdinand2014]

Your diddly of not earning anything for a week comes to about $25. I wouldn't be that concerned.

I’m sorry, I thought this was Bogleheads.org!!

I just think sending a check every month is a bit of a pain, and I don’t like the time lag. There must be a better way.

Use app. and snap photo. check deposit. Available one business day.

[Wiggums]

I have three EFTs automated each week followed by an automated purchase the next trading day. That has been running for 15 years.

[Creditcardguy]

I have wifes IRA, my SEP, Brokerage accounts and 529's at Fido. My SEP I just use the Fido app on my phone and snap a picture of the check from my business checking account. Ready for investing by the end of the day. My other accounts I just have set up automatic transfers from my personal checking accounts linked to Fido. for monthly contributions. All available within 1 business day for investing.

This is cool, but they told me I can’t do it with a self employed 401k for some reason.

I’m good on the amount we (wife and I) can contribute, 56k total, both with both my accountant and Fidelity. We have a S Corp.

Thanks for all the suggestions.

[Ferdinand2014]

I have wifes IRA, my SEP, Brokerage accounts and 529's at Fido. My SEP I just use the Fido app on my phone and snap a picture of the check from my business checking account. Ready for investing by the end of the day. My other accounts I just have set up automatic transfers from my personal checking accounts linked to Fido. for monthly contributions. All available within 1 business day for investing.

This is cool, but they told me I can’t do it with a self employed 401k for some reason.

I’m good on the amount we (wife and I) can contribute, 56k total, both with both my accountant and Fidelity. We have a S Corp.

Thanks for all the suggestions.

I also own an S-corp. I chose a SEP as it was so easy and essentially 1 page of paperwork. As I am only employee, it couldn't be easier. The SEP also restricts how you contribute. You can mail check or photo by app deposit. However automatic investments can't be done by EFT like my other accounts. Instead with SEP you can only set up automatic investments from the SEP brokerage account into the mutual fund/ETF investment, but not from outside bank (only by check).