Directed IRA Podcast

Solo 401(k) Basics, Rules, and Contribution Deadlines

• Mat Sorensen and Mark Kohler • Season 7 • Episode 4

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If you’re self-employed and want to put more money away for retirement, the Solo 401(k) is one of the most powerful tools available, but the rules and deadlines matter.

In this live webinar, Mat Sorensen will walk through the Solo 401(k) basics, including who qualifies, how it’s set up, and the special strategies that make it so effective compared to IRAs and SEP IRAs. He’ll also cover the key 2025 contribution limits and deadlines you need to understand before the 2026 tax filing season.

We’ll cover:
- What a Solo 401(k) is and how it differs from IRAs, SEP IRAs, and traditional employer 401(k)s
- Who qualifies (and who doesn’t)
- How a Solo 401(k) is set up and what has to be in place to maximize contributions
- 2025/2026 contribution limits, including employee vs. employer contributions and how they’re calculated
- Key deadlines to know before the 2026 tax filing season
- Special features unique to Solo 401(k)s
- Common mistakes and misconceptions that can create tax or compliance issues

Why Directed IRA?

At Directed IRA, we’ve helped thousands of investors put over $3 billion into real estate, private funds, notes, and more, all inside tax-advantaged retirement accounts. Our team of experts and streamlined platform make it easy to invest with confidence.


Click or tap the link below to download the slides from this webinar:
https://directedira.com/wp-content/uploads/2026/02/Solo-401ks-2026.pdf

Directed IRA Homepage: https://directedira.com/

Directed IRA Explore (Linktree): https://linktr.ee/SelfDirectedIRA

Book a Call: https://directedira.com/appointment/


Other:
Mat Sorensen: https://matsorensen.com & https://linktr.ee/MatSorensen
KKOS: https://kkoslawyers.com
Main Street Business https://mainstreetbusiness.com



SPEAKER_00:

Welcome everyone to a special Directed IRA webinar and directed IRA podcast episode. Today we are going to be talking about one of my favorite topics, one of the critical strategies in self-directing, the solo 401. Solo 401k plan is for those of you that are self-employed with no employees. We're going to get into this, how to set it up, but I want to make sure you understand why this matters. You can put 10 times as much money in a solo 401k as you can an IRA. We can put over 70 grand a year into a solo 401k. And if you're married and your spouse works in a business with you, you can be putting over 140 grand per year of new contributions, Roth dollars or traditional, you get a pick into the solo 401k. There's a lot of other perks and benefits to the solo 401k. And in general, my perspective is the solo 401k is the number one retirement account if you're self-employed. Now, in the current gig economy we work in right now, this could be your full-time job, your main hustle. This could be a side hustle. You can have a 401k at your day job and a side hustle on something you're doing on the side, and you can still have a solo 401k. So we're going to dig into it and actually go pretty deep today. So fair warning, I'm going to get deep into the rules here. I want you to know, for any of you that have a solo K or thinking about it, pretty much everything you need to know on this. Now, um remember, we do a webinar every week now at Directed IRA. Same time, same place, every Tuesday. One mountain, 12 Pacific. That's right. Okay. All right. We're in Arizona, so I never know what the hell we are in right now. So one mountain, 12 Pacific, every Tuesday. And make sure you come to each of those webinars. It's a great place to learn. Um, you can also be chatting with some other self-directed investors in the chat as well. Also, as we're going through today, if you have questions about a solo, okay, setting one up, book a call with our team. There's some of them in the chat here. You can go to directdiary.com, you can book a call to go over your specific situation and a solo 401k account. Ask your questions. You can also open the account fully online. But our team's here to help you with questions you may have along the way as well. All right, well, let's dig into the solo 401k and let's just get into it. As I said at the beginning here, the solo 401k is for self-employed people. You have a business. This could be main hustle, side hustle, but you have no other employees. So the IRS calls this a solo 401k. Sometimes they call it an individual K or a uni K. Everybody has some different little language for it. Solo K is a made-up word, the industry made. But basically what it means is you're self-employed. And the IRS said, hey, all these self-employed people that don't work at a big company that has a 401k, but they have a business. They don't have employees they need to contribute for. It's really just them or maybe them and a spouse or family or partner that work in the business with them. We should let them do their own type of 401k that's a little easier. It's a little more streamlined. But let's let them max it out under the most aggressive 401k rules possible. And this is the solo 401k. So under this 401 plan, I mentioned this at the top of the hour, at the beginning of the webinar, is you can put in 72 grand per year. This is 2026 contributions as a solo 401k contribution. So I'm getting way more money in. Now, the important part of a solo 401k is I can get more money in. It's only for self-employed people. We'll talk about a little bit more here in a second. Um, I can self-trustee this, I can be the trustee of this and have a checking account in it. We'll talk about that more in a second. I can take a loan from it, even. With your self-directed IRA, you can't lend yourself money, but in a solo K, you can lend yourself money, a max of 50K. We'll give a little more detail on that. And then for any of you real estate investors buying real estate where you're getting debt to leverage the purchase, there's a tax called UDFI that can apply to an IRA. Solo 401ks and all employer 401ks are exempt from UDFI tax. So those are four little key benefits here. There's a lot more to it, though. So let's talk about qualifying that for a solo 401k and who the solo 401 is for. So you must have a business. That's the first thing. I don't care if you drive Uber, you're an artist, you um do landscaping, you're a doctor, dentist, whatever it is, you must be self-employed. You must have a business where you're receiving income for goods or services. Now, what does not qualify as a business is I have an LLC with a rental property that receives rental income or capital gain income when I sell it. That's not a business for purposes of solo K rules. Solo K rules are meant for companies that sell goods and services. All right. So think of Microsoft, for example. They have a 401k plan for the benefit of their employees. Think of Dunder Mifflin, right? Dunder Mifflin has the Dunder Mifflin 401 plan for all of its employees, and everyone has their account in it. But the plan, the way you qualify for the 401k is at the business level. And the business creates the 401k plan. So let's say you, you let's say your name's Art Vandalay and you're an importer-exporter, okay? Uh, and let's say your company's called Vandalay Industries. You don't have any other employees, it's just you. Maybe you got a partner in it, or your spouse or family works in it. Well, Vandalay Industries is going to set up the solo 401k. So it might be Vandalay Industries Solo 401k plan. All right. That might be the name of your actual 401k. Now, Art Vandalay, you the owner, are actually an employee in the business. So you have an account in the solo 401k. The company created the plan and adopted the plan as the IRS lingo. And you are also the employee that participates in the plan. Now that's important because for solo case, a lot of people get confused because they're like, well, I own the business, but I'm the employee. You are both in this example. If you're, you know, Jim at Dunder Mifflin, okay, or Michael Scott and you work at Dunder Mifflin, well, the company is Dunder Mifflin and that's company money. And then you're Michael Scott and you're putting money in as an employee, and the company's putting money in, maybe matching as an employer. And so sometimes it's a little uh convoluted there because when you're a solo K, it's both coming out of your pocket in, right? So when we talk about doing a 401k at your work to get the match, where it's like 100% return on your investment if your company doesn't match where you have a 401k. Well, there's no match analysis here on a solo 401k. All right. So you must be, you must have a business, self-employed, selling goods and services. It must not have other employees. Now, let's define that a little bit more. You can have 1099 independent contractors. We have a lot of real estate brokers that set up solo Ks. They might have other agents that work with them, they 1099, maybe a virtual assistant, they 1099, maybe even a part-time employee here and there. Those are all fine. But if you have any full-time employees or a part-timer that's worked for you for three years or more, the solo K doesn't work. What basically the IRS says is if you're a business owner and you have a solo K and then you start getting employees, it will need to term out and turn into a regular 401k, which basically means you have to offer it to all your employees and it starts getting a little more tricky. So solo Ks, best for you. No employees. You can't have partners, business partners, family members that work in the business and still do a solo K, and they can have their own separate accounts in the solo 401k as well. All right, now what's included when you set up a solo 401k? There are about three or four things that you must have. The first is you must have an IRS pre-approved plan document. Now, in our law firm KQS Lawyers, that's also my law firm KQS Lawyers, we have an IRS pre-approved plan document for clients that are getting a solo K plan set up there and you're getting an attorney consult. If you're at directed IRA, where we're also setting up a solo 401k plan, we have also have an IRS pre-approved plan document. And we don't provide a consult with that in terms of like a tax and legal consult. We answer your questions and help you along the way, of course. But we have like a docs-only package when you're setting up a solo K. So the first thing I want to make sure you know when you talk about, well, how do I get this set up? And like, what is it actually? The first thing it is, and primarily is it's a plan document. And the IRS only recognizes your solo 401k if you have a plan document. This is not a template you can get online. This is not something you can create yourself. This document must be approved by the IRS. So we've gotten ours approved at Directed IRA and KQS Lawyers, those different solo K plans. They're both the same, but they are both separately approved so we can issue them to you as a customer. Second thing you'll typically want is an EIN. We get a separate EIN for your solo K. You're gonna have an EIN in your business, right? You have a Social Security number individually, but your plan is gonna get its own EIN. Why? Well, when you start investing this, let's say you go buy real estate in your solo K and you sell real estate, there, the title companies will say, we want to issue the you the 1099 for the sell proceeds. Well, you don't want to give them your social, you don't want to give them your business EIN. It needs to go to the solo K. Now, for those of you that have a solo K at a Charles Schwab or a TDM era trade, this doesn't matter. But for those of you self-directing, an EIN is important because we want to make sure the tax reporting is going to the 401k, which does not pay taxes as you're growing and investing and building this money. Third piece, custodial account. This is what we do at directed IRA. Not only can we set up your solo K plan for you, we will create an account for you. We call a custodial account. You're the trustee of the Solo K. We'll talk about that here later. But the account is where you're gonna put your money. You're gonna make your contribution, you're gonna invest. All right, this is where we hold custody to the assets. We're tracking the money you put in, the money you take out. We'll send any 1099s to the IRS. All right, this is all happening at the account level, and the account would be at directed trust company for your soul okay. Now, let's say that you have a solo okay and you work in the business and your spouse works in the business. Well, you'll have an account for you and your spouse will have an account for your for them. Let's say that um you do Roth contributions and traditional contributions. Well, you're gonna have two accounts. Let's say your spouse does the same. Well, they're gonna have two accounts. So you'll have one solo K plan, but you might actually have four total accounts. Now you don't need all of those. I'm just saying if you start adding all these other people in and multiple account type options, you can end up having multiple accounts under one solo 401k plan. Last thing here is you might have what's called a trustee checking account. A lot of people are familiar with the IRA LLC, where you have a self-directed IRA that owns an LLC 100%, and that LLC has a checking account. And a lot of people call that a checkbook control IRA. It's the way you get control of the funds to go make certain self-directed investments. And if you're a real estate investor or someone where you make a lot of transactions or you need the money quick to buy a property, an auction, or whatever it may be, that checking account is very helpful. When a solo K, you can have that checking account without an LLC. You can set up a checking account in the name of the Solo K account. And we use Titan Bank for that. They understand what this is, and you'll have a checking account where you can be signer because you, the business owner, are trustee of the solo 401k. See, we're going to be custodian of the account, but you, the business owner, are solo are the trustee of the solo K account. That allows you to have signing authority for the accounts where you might do this trustee checking account. All right. So that gives you some checkbook control in a solo K without having to do an LLC. Now you can do an LLC where the solo K account owns an LLC, and then that LLC has a check account. And you do that for asset protection, really, but you don't need to do the LLC for checkbook control. You'll get that right at the solo K level without having to do the cost of an LLC. All right. Let's talk about just like what the solo K is and getting in money into it now. So we know you have to be self-employed. We know this is a plan that the company adopts. Okay. By the way, this is a Seinfeld reference for the two or three of you who understand it. If not, it's still a good example. Okay.

SPEAKER_01:

We've already received comments about it.

SPEAKER_00:

Okay. Art Vandalay might be an architect too. I don't remember if I think he was an importer exporter, but he's an importer-exporter. Importer exporter. Okay. Um so when you start putting money in the solo K, we got to get contributions, right? Well, there's three different ways you get money into this solo 401k account. The first is a rollover. You can actually roll over money from an old 401k, from a traditional IRA. You can roll that money into the 401k. Okay. Um, we have a lot of clients that do this. They leave corporate America. And even why I have clients that start a small business and they create this new solo K plan in their small business, roll over their old 401k, and then they take that participant loan and lend themselves 50 grand as kind of startup capital that they can use in the business. It's just one little use case there. But let's say you want to self-direct and start buying alternative assets, which we do, of course, every day here at directed IRA. Well, you'll set up the, you can roll over existing funds and start with the solo K. Now, what's more common for solo Ks is I run and we run into people who are like, Matt, I'm self-employed. I've never had the company 401k plan. I've been self-employed for 10 or 20 years. I don't have employees. Um, I gotta start maxing out contributions. I got to get new money in. What do I do? Well, that's why we love the solo K because we can do 72,000 of new contributions into the solo 401k. All right, so as you can see here on this diagram, and by the way, the deck, I don't know if we've dropped it in the chat yet, but we should if we haven't yet, because this deck is super helpful. We want to let you guys have a copy of this. There's a lot of detail in this that I think would be super helpful. All right, so um as I'm putting new contributions in, we have two buckets of contributions. We have employee contributions and we have employer contributions. Now you own the business, so that's the company, and just think of the money coming from the company is the employer contribution. The money coming from you as the person working in the business is the employee contribution. So, in the example here, let's say that Vandalay Industries is an S corporation. Let's say you took a W-2 from your S corporation for$50,000. Okay. Well, what the rules say for solo Ks is as an employee, you can put$24,500 into the solo 401k for 2026, so long as you made$24,500 in 2026. As an employee,$24,5. Now, if you're$50 or older, you get to put in an extra eight grand. So you can put in up to$32,500. And then there's this new rule for the next four years where between age 60 and 63, you get to put an additional like$33,250 for a total of$35,750. But for now, I'm just for those of you 50 plus, just know you can actually do more as an employee. But let's just keep it simple. Let's say Art Vandalay is$45. He puts in$24,500 as an employee because he made$50K. Now let's say that Art Vandalay really only made$10K. Can he put in$24.5? No. If his W-2 or his self-employment earnings was only$10,000, he can put in$10,000. All right. So uh, but as long as he made the$24,500, he can put in$24.5. All right. So now let's go to the employer contribution here. The employer contribution isn't a set dollar amount, it's a percentage. So it's 25% of whatever the W-2 is for an S corporation. So his W 2 out of the S corporation was 50K. So 25% of 50K is$12,500. So he put in$245 as an employee. He put in$12,500 as an employer. So there's a total there of$37,000 of solo 401k contributions, Art Vandalet got to do off of a$50,000 W-2. That's a lot of money going into a retirement account. Let's just compare that, by the way, to a SEP IRA. The SEP IRA, if you had a$50,000 W 2 in a SEP IRA, you can only put in 25% of what you made, which if your W 2 is$50K, that would have been$12,500. In a solo$0.1K, I get the additional jump because I get to do that dollar for dollar up to$24,500 as an employee. So that's how the numbers work. 24-5 employee contribution, 25% of whatever the W-2 is for US corporation owners or even C corporation owners. And the total amount cannot exceed, though,$72,000. Now, if you're 50 plus, it's more, of course, but for Art Vandalier here, he's 45. So the max he could do would be 70, would be 72,000. And that's what you would put in if I think like the W-2 is maybe like 140K or something, where which you'd have to max out to hit that 72,000. Okay. So let's just run another example. Let's say that the W-2 is 100K. W2 is 100K. How much can Art put in as an employee? Well, 24.5 is the max. He could do 24.5. How much could he put in as an employer? 25% of 100K. That'd be 25,000. So now we're at 49,500 of what Art could put in off of a$100,000 W-2. Okay. Now, contributions, by the way, for employee or employer can be traditional or Roth. You can decide. Usually employer contributions had to be traditional dollars. But a couple of years ago, the IR the tax code changed and allowed for employer contributions, including solo cases, to be able to have Roth employer contributions. So that 72 total could be mix and match. It could be all traditional. It could be all Roth. You get to choose how you want to divide that up. If you do some as traditional and some as Roth, just keep in mind though, you'll have two separate accounts because you have to track those funds separately. So if Art Vandalay did his employee contribution as Roth of 24,5 and the 25,000 employer contribution was traditional, he's going to have a Roth account with 24,500 and a traditional account of 25. Or he could just put the 49,500 all into one Roth account. All right. If you are a sole proprietor, though, the rule for the employer contribution is 20%, not 25%. It's just a weird little caveat for sole props. When you're contributing as a sole proprietor, you put in 20%, not 25%. It has to do with the self-employment tax issues. So let's just run the numbers on 50,000 of net income. You can still do 24,5 as an employee contribution plus 20% of an employer contribution of the 50K, which would be another 10 grand. All right. So that would be 34,500 you could put in as a sole prop. We're cooking here. I hope you guys are hanging with me here. If for any of you who are going next level, by the way, let's say you want to do the mega backdoor Roth and you want to do it in a solo 401k. By the way, get a tax consult with our law firm, sister law firm KQS lawyers. They will help you understand that better. Um, this is a more advanced strategy. You're generally making a lot of money if you're doing that strategy. We love it because it's way you're getting 72K in the solo K every year using that mega backdoor strategy. Um, but essentially, this is a newer strategy for the the 401ks and a little more nuanced. So I'm just gonna leave it at that for now. We'll see if anybody has questions. We can jump back to it though. All right, contribution deadlines. Super confusing. Okay, this is like one of the areas of the tax code that just guaranteed the existence of CPAs and tax attorneys. This is just like job security for us. Why not like make something totally nonsensical, not logical, and confusing as hell? Um, and that's what they did with the solo 401k and 401k contribution deadlines. So here's the short way to think about it. Your contribution deadline is the tax return deadline. Okay, I'm gonna make some caveats here, but General, just think of it that way. If you had a solo K plan set up in 2025 and you're like, well, when do I need to make the contribution? Well, you have in general, if you're let's say a sole proprietor, your tax return is due April 15th. So you have until April 15th. Plus extensions, which if you extended your personal return, which is where your Schedule C is, that's where you report as a sole proprietor. If you extend it to October 15th, that means you actually don't have to put your money in until October 15th. And that assumes you had a solo K plan set up back in 2025. Okay. I'm going to get it to set up timing here in a second later on. But just think, just hang with me of like, when do I need to get the contribution in? And that's for employee or employer contributions, by the way. Let's say that you are an S-corp owner, though. All right. There's a couple, this is the most common self-employed person. We generally like S corporations for our business owners, whether you're a small business, big business, medium business, if you're a business owner working in that business, you generally should be an S corporation to save on self-employment tax. Well, what this means for your solo K is your contribution deadline is the tax return deadline, which is March 15th. It's the company tax return deadline plus extensions, which is September 15th. However, if you're an S-corp owner, you have to do your W-2 for 2025 by January 31st, 2026. That W-2 needs to have your 401k deferral, your employee contribution listed on it. Even though you don't have to put the money in until March 16th, 2026, or September 15th, if you extend, even though the money doesn't have to go in yet, you have to elect for it and it needs to be on your W-2 when you're doing this in January. So as we're sitting here in February, if you're an S Corp owner and you didn't do this, you're not doing employee contributions in your solo K for 2025. We can still knock them out for 2026, but it's not happening for 2025 because your W-2's already passed and you technically needed to elect for it in 2025, even if that was the last day of the year. Now, your employer contributions, don't worry. Those can happen by the tax return deadline plus um extensions. All right. So now if that went totally over your head and you're like, Matt, you just lost me there. Just think of this simply. Make your contributions within the tax year of when you're contributing, and you don't have to worry about this. This is for the people who like to wait and put their money in at the last minute. Or someone's setting up a solo K plan now, trying to get tax savings in 2025, which you can do. Okay, I love that. I'm just saying some of these deadlines are a little more tricky, but typically, as you're get once you get this going, especially after the first year, just get the money in as soon as you can, and tip typically within the year. If you need to procrastinate, these are some of the deadlines just keep in mind. And keep in mind we have this um uh presentation which you can download as well. All right, we talked about rollovers as well, but I just want to hit a couple other points here. So if you got a question, make sure you're um bribing Aaron or you know, being nice to him in the chat so he takes your question.

SPEAKER_01:

I'll take crypto.

SPEAKER_00:

Crypto, okay. Or gold and silver. All right. So um speaking of crypto and gold and silver, those are investments you could own in your solo 401k. So solo 401k accounts, what we do at directed IRA, of course, where you can own real estate or a private fund or precious metals, crypto. You can do private lending. These are all assets your solo K account can invest in as an investment. So if I'm Art Vandalay, let's just run through this here. I'm Art Vandalay, a Vandalay Industries. I got no other employees. I set up a solo 401k. I made 100 grand on my W-2. So I put in 245 as an employee contribution, and then 25% of the 100K is an employer contribution because I'm an S-corp. So I've got 49,500 and I did it all as Roth contributions. That's all in my Roth solo K account. Now I'm over here and I got the money in the account and I want to invest and grow it. I want that 49.5 to turn into 50, 60, 70 grand from investment returns and greater over time as well. So I could say, hey, I want to put that 49.5 into Bitcoin right now. You could do a crypto solo K account. You think Bitcoin's got some, you know, you're gonna buy the dip or whatever your thesis is, or you think it's gonna be greater over time. Maybe it's XRP or Solana, whatever you're into. So you decide you want to do crypto. Well, when those, if that appreciates in value, those gains go back into the Roth solo K account, no taxes. You could say, I want to do some private money lending. I want that solo K, that$49,500. I want to go lend it out to some other real estate investor and charge them 10% interest and two points. So I'll get$5,000 back, 10% interest and two points. You know, I'll get, what's that gonna be a thousand dollars on points? So I want to grow the account that way from private lending. Okay, whatever it might be, you could put 50,000 in as a into a private fund. You know, whatever your investment is, that's what you're gonna do to grow and build the account. We got to save and put the money aside in new contributions every year. And we want to maximize and get as much dollars in. We want to roll over what we can. If you have an old employer 401k or an old traditional IRA out there, but we don't want to just put the money in. We want to go invest it. Okay. And this is where in self-directing, you got to be a little more involved and go find the things. Now, in the interim, it can be sitting in cash, and sometimes that's your investment thesis because you think the market's gonna go down or whatever, who knows? Um, but you could also say, well, I want to just buy a mutual fund or an ETF until I find something. We can do that here at Directed. It could just you contribute in and you it's like 25 bucks. You can go buy a mutual fund, right? And just wait until you find the alternative asset that you're looking to do. Maybe you're looking for a real estate deal and it takes six months. Well, in the interim, you could at least have the money in, contribute, get the deadline, and then uh get the money in before any deadlines, and then um you could be in the market and whatever mutual fund or ETF even that you wanted to be in.

SPEAKER_01:

We keep getting the same this one over. Let's hit this one. Can I uh this comes from Jim, the most recently one that asked this question. Can I roll over my Roth IRA into my Roth solo 401k?

SPEAKER_00:

Okay, great question. I breezed over that. I skipped that, but I did have a slide for it. So let's show it here. Jim, this slide's for you.

SPEAKER_01:

Um and the slides are shared there in the chat. There's a PDF that was dropped in the chat, so you can go grab the whole slide deck now.

SPEAKER_00:

So, Jim, I hate to say this is kind of a dumb rule. You cannot move Roth IRA dollars into a Roth 401k. Um, I I was even in Washington, DC, literally at a retirement plan conference. And the retirement czar under the Obama administration, his name was Mark Ivery, he um would always come to our conferences. I got to know him a little bit, and I would always like to, you know, talk shop with him. And he was like, this is something that is so dumb that needs to be fixed, but there's no constituency begging Congress to do it. So it's just been sitting there. And whether you're Republican or Democrat, and everyone's like, this is just dumb. You should be able to move money from a Roth IRA to a Roth 401k. But you cannot. You can do the opposite. You can go from a Roth 401k to a Roth IRA. You just can't go Roth IRA to Roth 401k. So, what I tell Roth IRA clients is once you're a Roth IRA, you're always a Roth IRA. It's not going anywhere else. It's not going to traditional IRA anymore. It's not going to a Roth 401k. If you set up a Solo K later, it will always be a Roth IRA. Now, your traditional IRA could be rolled to your traditional solo K account and then converted to Roth. Your old employer 401k that's a Roth 401k. Those Roth 401k dollars could get rolled into your solo Roth 401k. So that's the one little hiccup in the rollover rules. Roth IRAs just don't get to play into the solo K party. So there's no workaround either. Um, that we've at least we found on that. I can't think of any. So, all right. Next question.

SPEAKER_01:

Uh, can I have a full-time W-2 job or job that's 1099 and also establish a solo K? So, like I have a side hustle and I also drive Uber, but I have a W-2 job as well. Can I participate into a solo 401k?

SPEAKER_00:

Yes. And we have lots of clients that do that. And one of the strategies that we've seen clients do, I think is pretty smart, is if they're day job 401k, they'll contribute to that still up into the match. So let's say your day job 401k, let's say you make 100 grand. And let's say I'm just doing this so the math's easy. Okay. Let's say that your employer says, hey, if you put in 4% of what you make, we'll match that dollar for dollar in your 401k up to a total of 4%. So let's say you make 100K, you put in 4 grand. The company is going to drop 4 grand in as part of the match. So now you've got$8,000 in the 401k. Now we want you to do that. That makes sense. Even if your only investment option is some crappy target date fund or mutual fund you don't understand or aren't excited about, like just that immediate doubling of your money from putting your contribution in and getting the match from your employer makes sense. So we call that the match and out. Just put enough in to get the match and then stop contributing to that employer 401k because your investment options are limited. What we want you to do next is if you got the side hustle or other business, then start contributing to the solo K. Adopt a solo K in the small business or side hustle that you have and max out your contributions and dollars there. And that way, the money I put in the solo K, I have much more greater flexibility of how I want to invest it. I can self-direct it. I don't just have the menu of mutual funds or target date funds to pick from.

SPEAKER_01:

What do I do if I have a SEP currently? How can I Awesome? How can I get to a solo 401k? What would be the process for that?

SPEAKER_00:

So if you have a SEP, that's for a self-employed person already. So I know you're self-employed. Presumably you don't have employees. So we would just set up a new solo K. And you would roll your SEP IRA into the solo 401k. So SEP IRA dollars are traditional funds. So you would there, you can do Roth SEP now, actually, but I've I've not ran across someone that's done it yet, but it changed in law about three years ago. Most CEPs are all traditional dollars. So you can roll that traditional SEP into your new traditional solo K account in the Solo K plan and then just start contributing to the Solo K. Um, you could also convert that to Roth if you wanted to go Roth and just start, and then you'd make all your new contributions to Roth as well, too. So you don't have to go all Roth. I'm just, you know, for the Roth fans out there, just know we can convert those traditional SEP dollars over to Roth on day one once it's in the Solo K. Or you could leave it as traditional and keep doing traditional contributions because you want all the tax deductions on the traditional contributions. There's not a wrong or right way to do it. I tend to be more of a Roth guy. And, you know, short-term pain, pay the tax for long-term gain, tax-free withdrawals. But you could be chasing tax deductions now. I totally, totally get that. And doing traditional.

SPEAKER_01:

Oh, this is a you want to take one more?

SPEAKER_00:

Yeah, let's do one more and then we'll bounce back.

SPEAKER_01:

So okay, so this is a good one. Ryan's uh he he this comes from Ryan. He's sent it a few times, I guess. Thanks, Ryan, for subscribing to our YouTube as well. Matt's YouTube directed. So I think uh it's a little bit difficult on what he's trying to ask, but I think I get it. So he has a real estate company, LLC, set up as a disregarded entity.

SPEAKER_00:

Okay.

SPEAKER_01:

He wants to know if he can handle the transaction for purchasing of a property if it doesn't receive a commission. So and then the follow-up to that is can I uh with his solo K. So a yeah, yeah, we're we're gonna use it in this case. I know what he's saying. He's looks like it's an IRA LC. I want to do it as a solo K.

SPEAKER_00:

It's the same answer.

SPEAKER_01:

Same, yeah.

SPEAKER_00:

And then same rule.

SPEAKER_01:

Also, can I also manage the property if I'm not getting compensated for managing it?

SPEAKER_00:

Okay, great.

SPEAKER_01:

That's two parts.

SPEAKER_00:

Okay, so whether you're using a solo K or a self-directed IRA, IRA LC doesn't matter. The rules on this is the same. What we're basically asking there is hey, once I've got the money in my self-directed account, solo K, self-directed IRA, IRA LC structure, doesn't matter. And let's say I use that money in the retirement account to go buy real estate. Can I be the agent on that? And I won't get a commission, but can I actually be the agent on that? Yes. You'll waive the commission typically, reduce the purchase price. Let's say there's a 3% buyer's agent commission. The house is, you know, 300 grand.

SPEAKER_01:

It's exactly what he asked. It's a hundred K purchase. I'm getting, you know, can I reduce it three grand and 97K?

SPEAKER_00:

Absolutely. Okay. So do that and just or just negotiate that, you know, with the seller as you're doing it. It's the same net proceeds to the sellers, so they shouldn't care. So, but then the retirement account's getting it. And and you can be basically the agent, and you can be the agent doing this. Now, now the 401k owns it or the self-directed account, whatever account type it might be. Now you want to manage the property. Can you do that? Yes, but I want to make sure you're not crossing any lines. Once you start managing an asset your retirement account owns, you can do management and administrative oversight, but you cannot do physical work. So, for example, I can go show the property to a tenant. I can write up the lease. I can tell them where to send the rent payment. I can make sure a handyman goes and fixes something. I can hire the landscaping company as trustee of the solo K or manager of the IRLC or owner of the self-directed IRE. And I can I can make all those decisions and kind of orchestrate all that, but I can't go in and remodel the kitchen and put on the tool belt. Okay. Now I'm adding value to the asset that the retirement account owns, and it starts causing a whole series of problems. Even the government accountability office, they did a report on self-directed IRAs to the IRS. They outline this as a no-no of something people shouldn't do. And a common problem, people mess up in self-directed accounts. So don't do physical work. But as long as you're on the administrative management side of things, don't sweat it.

SPEAKER_01:

Let me take one more before we go. So, because this is important. There's some people on here that have a solo K or a non-prototype they set up at like Fidelity or TD Ameritrade. They want to know can I can I move it to directed and self-direct it? Um, do the Roth component, start investing in alts.

SPEAKER_00:

Absolutely. So if you already have a solo K, but it's like a brokerage solo K, those plan documents that you're on right now are restrictive to that custodian. You're kind of like captive to that provider. And so they only let you use that plan and they only set it up for you as long as you're a customer of theirs and buying the stuff that they sell, stocks, bonds, and mutual ones. So those plans don't let you buy real estate or precious metals or any asset allowed by law. They in fact restrict you to buy the things that TD Ameritrade or Fidelity sells. So what you will do is you can restate that plan. It's still the same 401k plan. Let's go back to your art Vandalay. Let's say you set up the solo 401k plan for Vandalay Industries at TD Ameritrade. And now you're like, I don't want to buy stocks anymore. I want to go do a real estate deal with this. Okay. Well, we will restate the Vandalay Industries solo 401k plan onto our documents. It's still the Vandalay Industries solo 401k plan. It is now just on our plan documents, which have an open architecture type investment option where we say any asset allowed by law, we will let you acquire with that account. So it's called a restatement. You don't have to redo the whole plan. Um, and then it's easy to move the assets over as well, whether you just liquidate. Typically, you're going to liquidate down and just transfer over the cash from your brokerage solo c over to your self-directed solo K. And our team, there's a number of the chat at directory, I've helped hundreds, if not thousands, plus clients do that. So we can certainly look at the plan you have, restate it over onto R docs, and then get your account going over here, get your funds over so you can go invest in some private assets. And by the way, you could do a combo of private assets and public assets too.

SPEAKER_01:

Address how you can do that real quick with us, because that just came up. I've got three questions on that.

SPEAKER_00:

Yeah, the easiest is just do a mutual fund. Okay. Whether it's an SP 500 fund or whatever your investment thesis is, just do a mutual fund. Okay. Um, if you're wanting, most people aren't trying to day trade this. You know, if you're a day trader, you're typically not coming to directed IRA, right? You're you're some other trading platform where that's just what they do. But you might be like, well, I want to be in the market for some of the money, but I want to kind of like just get in and otherwise wait for some other better investment opportunity, and then I'll sell that position and go do the real estate deal, the other investment. Well, just buy a mutual fund. You can do that right in your account at directed IRA. We do have a brokerage trading option, but you don't need that. That is for someone that wants to day trade their account. Okay. So I uh the fee, I believe, on a mutual fund is 25 bucks per trade. So it's a fee of 25 bucks. If it's a stock, it's I think the same or 35. And there's some and there's some little cents per share that frankly is a pass-through cost that we have at the broker dealer. See, what's what's different when you buy a public asset from us than let's say a Schwaber Fidelity is Schwab Fidelity Robinhood get what's called payment for order flow. So they get paid by the citadels and the big brokerages that are trading your stocks. And what that means is you're actually buying that stock at a premium from what you could otherwise get. You're just not seeing the fee and the cost of that. With us, we're not doing that. And the brokerage we use don't do that. So they actually charge a fee that's disclosed and is clear what you're actually doing. So that's why there is a fee for that. Um, but just keep that in mind if you do want to be in some public assets and private assets, or you're bouncing back between public asset like a mutual fund, which is what I've done sometime with my account here, you know, versus okay, I got a uh now I got a private asset I want to go buy. So you can go back and forth.

SPEAKER_01:

Let's hit one more and then we'll rapid fire at the end. Sound good.

SPEAKER_00:

Okay, I gotta hit some more topics here.

SPEAKER_01:

So give me one this last one. Can you just clarify uh K1 versus W two? Yes. That keeps coming up. I got like five people that have asked me that. Okay, good.

SPEAKER_00:

So on the contributions where I was talking about your W-2, the contribution rules for US Corp owners, you get a if you're an S corporation owner, you get a W-2 as the employee for your salary and wages, and you get a K1 for your profits or net income coming out of the business. For contribution rule purposes, the IRS only cares about your W-2. They don't care what's on your K1. Now that sucks because I know what you're thinking, the five or six you that asked that question. Yes. You're trying to optimize to have the lowest salary possible. And you want to have a big K1 and a low W2. Well, if I have a big K1 and a low W2, that limits how much I can put into my solo K because the W2 number is what determines how much I can put in the solo K. That's just how it is. Now, Mark and I have done on our podcast before, Mark, uh, my partner and uh you know, board member, co-founder, directed IRA, we've done some episodes on trying to find the sweet spot for 401k contributions. All right. And like how much salary do I take from my S corporation? Because I the more salary I take, I'm paying self-employment tax, but I'm trying to optimize for 401k contributions. So I it's kind of like those two aren't in harmony. So you got to find that right sweet spot where it's like, well, how much am I really trying to get in? Just remember, even$100,000 W 2, you're putting in$49,500 as a as a contribution. So if you're a high income earner, self-employed, doing the S-corp, let's say you're making$600,000 a year. You take$100K W2,$500K on your K1, you're still putting in$50K as a contribution that year. So um, so you got to find the right balance between those two things. And I know they do not work in harmony. So you gotta kind of pick one or the other. Um, all right, let's jump back in. I want to hit a couple other topics. We'll come back to your questions here in about five or six minutes. Um, so hang tight if you got a question. Aaron will still be uh monitoring those. And remember, if you're like, man, I got a lot of questions, book a call with our team. We're happy to help. If you're someone that needs a whole tax plan and everything, like you're like, I got a whole other bunch of tax questions now about that solo, that S-corp, solo K. I want to do mega backdoor rough, call the law firm at KQS Lawyers, okay? Book an appointment there because that team can, you're gonna need more specific advice and tax planning if you're trying to execute on all those strategies, which I love. I want you to do that if you're in that scenario. All right, let's talk about solo 401k perks on buying leveraged real estate. So if you're a real estate investor and you want to go buy real estate, let's say that the property is worth$300,000 and you have$100K in the account, you want to get a loan for$200K so you can buy the$300K property. Well, when you do that with an IRA, there's a tax. Tax on the profits from the debt called UDFI. It's a whole chapter in my book. We've got a lot of other content on that. I don't have enough time to get into it today. It's actually not that bad of a tax because it's kind of profits on money you never had in the first place. Um, so the IRS is like, we're gonna tax this before we put it back into a tax advantage account. So that's what they do for IRAs. 401ks, including solo Ks, are exempt from this tax, the UDFI, on leveraged real estate. All right, so when I'm using debt to go buy real estate with a solo 401k, I don't even need to worry about this. It's automatically exempt. So that's another perk. A lot of real estate investors who are self-employed love using debt. Um, and you don't have to worry about uh the UDFI tax if you're in that scenario. All right, now you can do this 401k LLC where you have your solo K account, and that would be on the left there. That's your account. Let's say you're Art Vandalay. You got the Vandalay 401k, and you've got the Roth account that you put your 49,500 in for this year, and now that 49.5 from your Roth account, you wanted to use an LLC to go real estate to go buy real estate. And you want that maybe for some asset protection. Maybe it's gonna be a short-term rental, or you're just, you know, you want it's just gonna be a rental in general. You want some asset protection. So that Roth account could set up an LLC and it will, the Roth will own the LLC 100%. You can be manager of that LLC. You don't own the LLC at all, but you can be manager of the LLC, which allows you to have a bank account. Now the LLC will go and buy assets. Let's say the rental property, it will own the assets. The income goes back to the LLC. Remember, you don't own the LLC at all. The 401k account, in this example, the Roth 401k for Art Vandalay owns the 401k LLC. The LLC owns the property. Now you can't take money from this LLC. The only way you get money from the LLC is sending it back to the Roth 401k and taking a distribution from the Roth 401k. All right. So this is similar to the IRA LLC, which we use a lot for real estate investors with self-directed IRAs, and you can use this strategy for the solo 401k as well for your specific account. Just remember this is at the account level, and you can get checkbook control from the solo K account directly without having to do an LLC. So I would generally use this 401k LLC if you're trying to get asset protection, you're doing real estate investments. And we have lots of clients that will set this up. Okay. Next little tip and perk. These are kind of some of the bells and whistles here. Is this participant loan? So I've talked to a lot of clients over the years that are like, hey, Matt, I'm starting a small business. I just left my job in corporate America, and I want to start this new company, and it's an S corporation, but I need some startup capital. I want to tap into my retirement account. What's a strategy I can do? Well, you could set up a new solo K, roll over that old employer 401k. Let's say you got 200K at this old employer you've worked at. We set up a new entity for you for your new business. You know, what whatever it might be. Um, give me a company name. Prestige Worldwide. All right. Great name. Let's say, let's say you want to start an entertainment company, okay? Prestige Worldwide. You're gonna sign artists and you're gonna, you know, play at the Catalina wine mixers. So um, so you set up Prestige Worldwide. It's an S corporation. You rolled over your old employer accounts into your account as an employee at Prestige Worldwide. You're not making money yet, but you can still set up a solo K, even though the this new business, Prestige Worldwide, do an entertainment type business qualifies, even though it hasn't had money yet, you can still set up a solo K solo K under that business. So Prestige Worldwide adopts the Prestige Worldwide solo 401k account. Now, let's say that you are what are the brothers in step brothers? Dale. Dale. Okay, let's say you're Dale. Okay. Dale is gonna have, and this is you have his own account. Let's say he says a traditional solo K, and it's an old traditional 401k from Dale's old employer. They will roll that 200k into the solo K, the prestige worldwide, solo K plan for the account for Dale. Okay, I'm trying to break this down and be sort of painful about this, so hang with me. Now Dale's like, all right, well, we need some startup capital. He's got 200K in his solo K account. He can lend himself half the balance of that solo K not to exceed 50K. In this example, he's got 200K, half the balance would be 100K. That's too much. The max he can take is 50. So he loans himself 50K. He can use that money for whatever he wants. He could pay off high interest credit cards, he could use it in the business prestige worldwide. He could go to Vegas, he can do whatever the hell he wants with it. Okay. I would not recommend the last one, of course. Use it for something financially smart, starting business startup expenses, education expenses, paying off high interest debt. Those things make sense. Now you have to pay that money back to the 401 account over five years with at least quarterly payments, and you do charge interest. But you're paying the interest back to your own 401k. And the interest rate is prime, the prime rate of interest plus 2%, which I think right now is around seven and three quarters is what you would be paying in interest. But remember, that interest isn't going to a bank or a credit card company. It's going back into your solo K. And if you use that 50K in the business, let's say Dale used that 50K in prestige worldwide. Well, that's that was a business loan. That interest that he's paying back to his own 401k is an interest expense to the business. So now he's taking a tax deduction for the interest he's paying back into his own 401k on the participant loan. That's a pretty freaking cool strategy. So that's a little perk you can do with the solo K as well, is just know you can't access that 50K, half the balance, not to exceed 50K, by loaning yourself out money if you need to, or it makes sense in your situation. I wouldn't do that, by the way, unless you had one of those use cases of start-up business expenses, pay off high interest debt, or um, I don't know, that's probably it. That's probably the two use cases. Maybe you get in a some type of financial hardship or stress where you need to do it too.

SPEAKER_01:

And then Brennan can help out.

SPEAKER_00:

And then you can, yeah, yeah, we can get Brennan involved. Right. So, you know. Um, but what's the other brother though that's not cool? Oh no, no, Derek. Derek, yeah. Derek, but not cool. Screw Derek, Derek is not involved, okay? And he is not getting account in the solo K. All right. Derek's not not included. All right. Okay. Um, another movie reference.

SPEAKER_01:

Step brothers. I'll put it there in the chat for everyone.

SPEAKER_00:

Movie credit. Yeah. Sorry, guys. This is how we have fun. This is this is how I keep solo k's entertaining for me. Um, I geek out on it anyways, but and if you don't know these movie references, you're even missing out more um than you are on solo k's. Okay, let's hit a couple tax things to know. Uh there are two tax reporting things you need to worry about. One is once the solo K has 250,000 or more of assets, you have to start filing what's called a 5,500 easy to the IRS. Now, when we set up the solo K at direct and we have custodial accounts for you, we will do this for you. Once your account's valued over 250K, we automatically file this tax filing to the IRS. If you're doing the solo K on your own, though, this is up to you or your accountant, you got to take care of this and get this filed. If your solo K has 50 grand in it, because you just started it, and you're just starting, you know, you're in the first five or six years here of contributing and investing, you're not at 250K yet. Um, you don't need to worry about this. Okay. But once it hits 250K, you need to file it. Also, if you terminate the plan, regardless of what the value is, you also have to file the 5,500 EZ to tell the IRS you terminated the plan and what was in it. And then the other tax reporting item that needs to happen at the plan level here is 1099 Rs need to be filed. If you do Roth conversions in the plan in the solo cave for your accounts, or you take dis start taking distributions, 1099 Rs need to be filed. They go to you as the account owner, and then they will be filed to the IRS as well. Again, if you have an accountant directed, we automatically handle these for you as part of the account services, as well as doing your statements and tracking the funds and holding custody to the assets. I got two things I want to hit here. What if I'm sitting in the situation right now, here in February of 2026, as we're recording this, and I want to contribute to the Sol OK for 2025 contributions? How do I do that? Well, if you're an S-corp owner, you can still set it up now and make employer contributions, but you can't do employee regular deferrals. Now you can probably get away with voluntary after-tax contributions, even debatable here. But as a general rule of thumb, what we say is for S-Corp owners, if you didn't have the solo case set up by December 31st, 2025, the only thing you're going to get in is employer contributions. Okay. Even though the tax return deadline hasn't hit, the problem being is you typically need to elect employee deferrals and it needed to be on your W 2 by January 31st. Okay. But all the employer contributions are fair game. And question mark here on after-tax employee contributions, because those technically are on the W-2 as well. Now, if you're an independent, sorry, I was talking about S-Corps there. That's a slide for S Corps. Okay. For you sole proprietors. In the think about this. If we're sitting in February of 2026, as we are right now, and you want to make 2025 contributions, and I want to set up the Sol OK now. I didn't have it set up in 2025. What you can do is you can set up the Sol OK now, and you can still make employee and employer contributions. You didn't have to file a W-2 as a sole prop. Um, and the IRS has specifically said up until the original return deadline of April 15th, you can still do employee and employer contributions. All right. So right now, for you sole props, you can get full game. All contributions are fair game, even for 2025. Let's say you don't act on this. Let's say we're now sitting in June of 2026. And let's say you extended your tax return, your 1040, which would have had your Schedule C as a sole prop. And you're like, well, I want to set up a solo K and I want to contribute for 2025. I extended my tax return. What can I put in? You can't do regular employee deferrals. You can't do employee contributions anymore because the IRS specific, or sorry, the tax code specifically says that the employee contributions for sole props cannot be extended. The employer can. So if I'm in June here, I can set up the sole okay and I can still make 2025 employer contributions, but I'm not getting in employee contributions. All right. Now these rules can be a little confusing here. That's why we provided the charts and try to give some examples here. Find your entity type that you are, and then that'll tell you what you're able to do. Last point here, and then we'll get to questions. And sorry, we're gonna go a little bit over here, but hopefully this is helpful. There is a tax credit for solo K owners. And as long as you haven't taken this tax credit yet, you can use it. Whether you're setting up a new solo K or you're someone that's had a solo K for five, 10 years, even. Okay, this is called the automatic contribution arrangement. Um and EACA is this notice that we're gonna talk about here in a second. But basically, under secure 2.0, this is last retirement legislation, there's this incentive that Congress said, we want to incentivize 401k plans to provide automatic contribution structures to when an employee is eligible for the 401k, the employer automatically enrolls them. And if an employer does that and they create that in their 401k plan as their mechanism, we'll give them a tax credit, not a tax deduction, a tax credit. That credit is a maximum of 1,500 bucks. You claim it 500 bucks every year. So right now, if you set up a new solo K in 2026, or even you set up your solo K in 2022 and you haven't done this yet, in 2026, you can claim a$500 tax credit for doing this, and you'll claim$527 and$520. This is not the startup tax credit, by the way. A lot of tax credits for retirement accounts will exclude something where only the business owner participates. So the startup tax credit, which is like a$5,000 up to$5,000 credit, um, this is not that. That one restricted anybody that is primarily the business owner, which would mean solo case. So that one doesn't work. But this one, the automatic contribution arrangement, this$500 tax credit works. So what this is, is you're gonna create an automatic enrollment feature for the participants in the plan, which is you. So you're basically, as the plan, you're telling yourself we will automatically enroll you. There will be a default contribution amount. And the participant, you, the account owner, have the right to opt out whenever you want to. What does this mean? This means you need to do some paperwork to claim this. You don't really have to do anything. You don't have to do automatic contributions. Most solo K people don't, and they put in money whenever the hell they want. But you need to follow through these steps to be able to claim the exemption on your return. So we do at um directed, we do have the form for this. So if you have a custodial account at director, we set up your solo K and you have a custodial account, we will provide these for you. So there's a notice feature that needs to go out, and you technically send it to yourself. Okay. You're a trustee of the 401k typically, you will send it to yourself as the participant or anyone else that might be a participant. And um, but basically you have the option to just opt out of it. And you can even just check the box on the form, I opt out, or write on the form, I opt out. You can stay enrolled and just say, I'm gonna automatically contribute this because I max out the 401k anyways, so it doesn't matter. Okay. But I wouldn't get too caught up in like doing what the notice says because you're not bound to it. The plan just has to issue it to you. Each participant has the ability to opt out of it if they don't want to do it. Then what you're gonna do is you have to also have a plan amendment. Now, the plan amendments for this specific provision are not due until December 31st, 2026. These plan amendments for our plan and most plans will come out in the summer. So be on the lookout for that. We will automatically notify you as part of having the accounts with us. That includes any plan amendments. So you'll get the plan amendment and you'll be fine in terms of claiming this. Now, to claim this credit, it's IRS Form 8881. Now, there's a couple of different forms. In fact, I don't know if we can drop those in. I we did a presentation specifically on this. So I believe form 8881 is for the S Corps. Um, I think it's Schedule M or something like that for sole props.

SPEAKER_01:

We'll drop them in. Yeah, drop it in there in the recording.

SPEAKER_00:

I thought we had them both, but um uh and also you want to coordinate with your accountant or tax advisor, of course, on making sure that you get that done. So um, but this is a cool perk, is there is a tax credit out there, it's 500 bucks a year. What happens is this credit passes through the business and eventually hits your own 1040 as a tax credit for you business owners that are pass-through entities, S Corporation, or even obviously a sole prop, it's gonna hit your 1040 and be a$500 tax credit. And by the way, the cost to set up the sole okay and the annual cost for your accounts or anything like that is a business expense. So use your business card on that on our account or when you're paying us or KKO Swurs for any of those services, because this is a benefit provided to you as an employee from the business. So you should be expensing any of those costs. But again, on top of this, you can claim this tax credit as well. Okay, let's jump to questions. Um, you can book a call, of course, for with our team at directed IRA to get your solo 401k going. Or if you have any questions, if you need more extensive tax consulting and advice, you can get over to the law firm, KQS lawyers, particularly for any of those trying to do a mega backdoor at Roth. And the last thing I want to note here is the self-directed IRA summit. That is gonna be April 17th. This year we are going virtual only. It's a throwback to COVID. Generally, there's nothing you want to throw back to COVID for, but this was one where we did the self-directed IRA summit. Um Idaho. Yeah, me, Mark, and Aaron did it in Mark's when he had his Idaho studio because the hotels were all closed down and we had to go virtual on it, and it was awesome, actually. And so we're gonna try that format for this year, self-directed IRA summit, and we want to get as many people on as possible. This is a full day of training on self-directing from A to Z, beginner topics to advanced topics. We'll have multiple speakers and presentations on it. I'll be speaking. Of course, Mark will be speaking. We'll have other members of our team and some experts coming in. We'll have some of our larger self-directed IRA investors come on and share some of their secrets and strategies as well. So it'll be a great time. Get over to SDIRA Summit.com where you can register for that. If you're a directed IRA customer, you can attend for free. Okay. So if you have an accountant directed or you become a new customer, you can um attend the self-directed IRA summit uh for free this year. So really looking forward to that and that virtual format. We always do a live one where the virtual is where it's streamed virtually, but this time we're gonna cater to the virtual audience itself. Rather than presenting to a live audience and you get the virtual stream, we're gonna be presenting to the virtual audience. So it'll be exciting. Okay, questions. Yeah, let's do a couple. All right, let's fill a couple questions and we'll call it.

SPEAKER_01:

Matt, do you have is there a banking solution to open up a checking account associated with the solo queue okay?

SPEAKER_00:

Great question. We use Titan Bank. We like them because they know what the hell this is. Okay, I spent so much of my time talking to clients and answering their questions that the bank had for them about their solo queue trustee checking account or their 401 KLLC or IRLC checking account. And that client of ours was in the wealth management department, in the retirement account department, to the business department, to the individual banker that's 25 years old they're talking to that doesn't know shit. And so it was a pain. Sorry, that slipped. Um Freudian's. Yeah, it was that slipped. So we liked working with Titan because they understand this product. They have thousands of self-directed IRE customers. We've been sending clients there for a while. So they have a solution where they know what this solo K is for the trustee checking account or for the IRLC. So we highly recommend Titan Bank as the solution there. We've just we have a great working relationship and business relationship with them as well. That's Titan Bank one more time.

SPEAKER_01:

People, you said it, they asked.

SPEAKER_00:

You said it, they asked. Titan Bank. Yeah. So our team can direct you there. And um, we also kind of streamline the process there. You, you know, in the setup stages too, just to and we'll help coordinate and facilitate the sharing of documents with them for you. And that's another big hurdle because we'll do all the work for you, and then the bank asks for all the stuff that we have, and then you're getting it from us to send to them. And it's just it's not coordinated. So we have that coordinated if you're working through us and with Titan Bank, we can share back and forth. All right.

SPEAKER_01:

Uh, this question is from Michelle. You had a lot of great questions. Thanks for being on the entire time of your participation. Uh, can you go, Matt, through the EIN for the 5500 EZs? Is it for the plan itself or for the EIN of the business? Like, what am I doing?

SPEAKER_00:

Yeah. So I always recommend getting a separate EIN for the 401k itself. You don't have to. Okay. You can use the business EI EIN for the solo K. And for those of you that just have a solo K at TD Ameritrade or Charles Schwab or Fidelity, that's fine. Because they don't do tax reporting to you because you're trading on a, you know, you're trading on their platform for stocks, brokerage, they know what it is. So there's no tax reporting falling down to your business or the 401k. But once you start self-directing, but doing a real estate deal, you invest in a private fund. They want to know the EIN. They're gonna send 1099 cells or 1099 divs or K1s, they're gonna send that to that EIN. You do not want to use your business EIN. The IRS is gonna look, be looking for that income on your business tax return. We want a separate EIN for the 401k. That's why we get the separate EIN. Um, so then the second reason why is when you file the 5500, we want to list that 401k EIN on the 5500. Now, when you do the 5500, you could list the business EIN as well. Um, but we prefer to just get the separate EIN for the solo K because you can, and it just seems to make things clean where you're not having to stress about some 1099 or K1 or some other tax reporting. They hit your business return and your business return gets audited. Because the IRSCs you didn't claim that income.

SPEAKER_01:

All right. How many more you want to take?

SPEAKER_00:

I mean, I'll take them. Let's do a couple. We'll do a couple more. Hang out. We'll go a little over. You know, if you're this is going to be recorded, by the way. The recording will be up, so you can catch this later. Share it with your friends and family, of course. Let our team help you if we can be a resource for you. But I'll hang here and we'll answer questions.

SPEAKER_01:

Our studio audience just yawned at us. Yeah. You hear that trace. Oh. Just joking. We did hear it.

SPEAKER_00:

Yeah. Celsius.

SPEAKER_01:

Okay. I think it's Gary or Jerry. Great question. How can I do how can I buy crypto with my solo K? Can I, does it have to be in the Solo K? Do you have an option for that? Do I need to use my RELLC? What do I need to do there?

SPEAKER_00:

You have a few options there. That's what we're looking for. All options. Yeah, there's a lot of options. There's not a right or wrong way. So one way, if you're like, I'm just all crypto. That's why I'm doing this to invest in crypto. Then just do the crypto solo K account. That crypto solo K account will be linked to a Gemini trading account, and you can just trade directly at Gemini. That's the easiest, most straightforward. We open up a Gemini trading account in the name of your Solo K account. Let's say your Roth solo K account. And you just can go and trade there whenever you want. That's option one, easiest, most streamlined. Option two would be hey, I want to do some real estate and I want to do some crypto. Um the the couple you have two options there. And I don't want to overcomplicate this, but um the self-directed solo K account, because we we for those that just want to do crypto, we have a special just crypto account that's a product with Gemini, publicly traded, regulated custodian that we've worked with for years. If you're like, I want to do a little crypto but other stuff, do a self-directed account, okay? A self-directed for solo 401k account, and under that account, you can do a trustee checking account. That trustee checking account you can use to do real estate deals, you do private lending, the custody account could invest in a private fund, but that trustee checking account could be linked to an institutional trading account at Gemini. So we have launched the last few months, we launched an institutional trading option for those clients that have IRLCs with a checking account, or they have a solo K trustee checking account with their self-directed solo K account. Because you have a checking account, we can establish an institutional account at Gemini now for you where you can trade those dollars as well. So might sound a little confusing, but we can walk you through it if that's what you want, is the most flexibility to do some self-directed assets plus add some crypto as well using the same account.

SPEAKER_01:

If you're wanting to do that with uh art the with Gemini, please let us facilitate and do all that. If you try and do it yourself and put in your entity info and your solo K info and just referencing us, it will not work and it could cause a big headache for us, for you to get that account open fast. So just let us do it, let us facilitate it, and we'll get it done fast. You're not gonna wait months. Most of them are set up in a week, two max. So that's one of the benefits of us having that account facilitating that. So please just let us help you with that.

SPEAKER_00:

Yeah, great point. Like when you go set up an institutional account for an LLC or a or a 401k or something like that, and you go to a Gemini, a Coinbase, a Kraken, they think you're a hedge fund. They're gonna ask you documents like you're gonna put a billion or a hundred million dollars over there. They think you have a whole legal department and a CFO and an accounting team and auditors that do this shit all day. I'm not kidding. That they it is not fun. So we have streamlined it with Jim and I to say, we have these customers, they know what they're doing, we're gonna help them along in this process. Can we get them this opportunity to invest in crypto and use the platform? And so we've uh streamlined that, but work through us so we can get that established. We do have a fee for that, of course, for the for that to establish that for you. Um, but it's it's really the way to do it. And when I started, I started buying crypto. I've done a lot of real estate, private funds, startups. I've done a lot of different stuff with myself to right. But I did crypto in 2017 on my own. I had to do an institutional account. It was painful then, it is way worse now. Um, because of all the scrutiny on crypto and the regulatory stuff and the fact that they think you're a hedge fund. So okay. Let's take two more. Okay, yeah. We'll end on that one.

SPEAKER_01:

Now, what so what is the turnaround time? Uh I love all the like the buying questions. I'm just, you know, I'm a little biased, but uh on how to how things work, how the process works. So thank you for asking. We're we're happy to help. What's the turnaround time to establish a new solo K or and I also want to do a checkbook IRA L C. How how how long is it going to take me to get up and running with that?

SPEAKER_00:

I would say, I mean, it depends, but if you're ready and you're moving and you're communicating with this, like, I mean, we can get your solo K done and the docs done within a few days, you know, back out to you. Um, we can get the account open in in a few days. Like that, this the solo K takes some work. You've got to input some. We got to draft the planned documents, you sign them, then they're adopted. They're not approved anywhere where they're like filed, you know. So the solo K can be done relatively quickly. Um, then you need to get it funded. So the question is, well, how am I getting the money in? Are you making contributions? Well, that's great. You can make them directly through the website, link your bank account, contribute there. You can send in a wire, and those funds will be made be available faster. If you're rolling over a 401k from you know T Row price from your employer, former employer, that's gonna take some time. They're gonna mail the check to you. You're then gonna have to mail it to us. It's gonna be written out to the director of trust company. We're gonna deposit it. Then the bank's gonna hold it for five to seven days. Then your money's actually in your account. So that might take 10 or 20 days in that scenario. So it all it all depends on a couple circumstances. We're gonna move quickly on our end. Um, the solo K. Um, while there are some other steps to it, it doesn't have to be long. So, particularly if you know what you're doing and are moving quickly and communicating with us, and we help you along to make sure you know what you're doing. Um we can get it set up quickly. If you're making the contributions, we don't have to wait on some other providers' rollover. Um, so hopefully that's helpful. The IRA LLC, you know, we'll get your self-directed IRA account set up within 24 hours. You submit the application online. You can do the apps on this fully online, by the way, guys. Um, we'll get your account set up. And then we're just waiting for the LLC. So then we have the law firm drafting the LLC and filing that with the state. Turnaround time depends on the state. Um, but we'd like to get that set up so you're being able to act on that within two weeks. So, what I would say is I would give yourself at least a couple weeks lead time before making an investment. So if you're looking to invest in something in the next couple weeks, you need to start now. Um uh Hone Tie's uh one of our affiliates that sends us some of his referrals, great guys. Uh he's a really good self-directed expert himself. He always likes to say, uh, be ready so you don't have to get ready. So like that. I like that thinking of your account. Even if you get the account set up and the structure there and some money in there to get like maybe it's five grand, just so if you have money ready and the account structure is already going, and you can move the rest of the money over later. Um, a lot of clients will do that too. They'll just get 5k over here, get ready, whether it's the LLC structure or the solo K. Um, so they have the account, everything structured, done. And then you just got to move the rest of the money over when they find a deal.

SPEAKER_01:

A few of you, thanks, Matt. Thank a few of you have asked about the SGRA summit free ticket option, the virtual ticket option to attend April 17th virtually. Uh if you're an existing client, you would have received uh an email uh with that information and the code to discount it from 99 to zero. If you did not, just please contact our customer service line. They'll give you that code. You can call 602-899-9396. Let's end with this.

SPEAKER_00:

Yeah, you can because we can validate clients faster.

SPEAKER_01:

At directedra.com.

SPEAKER_00:

Yeah, yeah.

SPEAKER_01:

For clients only.

SPEAKER_00:

We're not gonna drop it here because we might, you know, we'll you gotta get you gotta be a customer.

SPEAKER_01:

Hey, we got your back, Marilyn. Want to get you there. Thank you for asking.

SPEAKER_00:

All right. Well, thanks to everyone for hanging in there. But hopefully you learned something. Well, this is recorded, so make sure you get over to directedira.com slash webinars. That's where all of our webinars are posted. Make sure you're signed up for the newsletter so you're getting notices on upcoming webinars, workshops. We hope to see you at the Self Directed IRA Summit on April 17th. Virtually, we will see you online. Um, don't show up at the office. And um, book a call with our team if we can be of any help to you. Until then, stay calm. Self direct on