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Self-Directed 401(k)

Most traditional banks and financial institutions offer 401(k) plans to their clients to encourage them to invest in the financial products they sell, but these generally have very limited retirement and investment features.The majority of 401(k) plans in the marketplace are not self-directed; as such, employees cannot invest their funds in alternative assets like real estate and cryptocurrency. IRA Financial Trust is one of the few custodians that offer self-directed 401(k) plans.

Our Products

1 | Self-Directed Solo 401(k)

A solo 401(k) plan is not a new type of retirement plan. It is a traditional 401(k) plan covering only one employee. In general, in order to be eligible to establish a solo 401(K) plan, one must be self-employed or have a small business with no full-time employees (over 1000 hours during the year) other than a spouse or other owner(s). As the name implies, the Solo 401(k) plan is an IRS approved qualified 401(k) plan designed for a self-employed individual or the sole owner-employee of a corporation. It works best when there are no other employees or a very small number of employee. 

One of the primary reasons the solo 401(k) plan is so popular with the self-employed is because it includes all the attractive options of a conventional 401(k) qualified retirement plan, but without the costly administrative requirements. This is because the Employee Retirement Income Security Act of 1974 (ERISA) rules and regulations do not apply to a Solo 401(k) plan since there are no non-business owner(s) to protect. ERISA is a body of federal law that sets minimum standards for pension plans in private industry.

When it comes to determining what type of Solo 401(k) plan is best for you, it is important to look at all the options the plan provides to make sure it will satisfy your retirement planning, tax, and investment goals.

2 | Self-Directed ERISA 401(k)

A self-directed ERISA 401(k) Plan is a 401(k) plan designed for businesses with more than one employee.  The DOL regulations provide that a plan that covers more than one partner or employee is subject to Title I of ERISA. The provisions of Title I of ERISA cover most private sector employee benefit plans. Employee benefit plans are voluntarily established and maintained by an employer, an employee organization, or jointly by one or more such employers and an employee organization.

IRA Financial Trust’s self-directed 401(k) plan is suited for businesses that are interested in providing all eligible plan participants with the ability to invest in alternative assets, as well, as gain the ability to gain more retirement flexibility.  IRA Financial Trust’s sister company, the IRA Financial Group, has helped establish over 5000 self-directed 401(k) plans and will help you customize the plan documents to best suit your retirement, investment, and tax goals.


What you get

Investment Options

Most self-directed Solo 401(k) plans will allow you to invest in almost any opportunity you discover, subject to the prohibited transaction rules. The income and gains from these investments will flow back into your Solo 401(k) plan without tax.

High Contribution Limits

Participants can make contributions for 2020 of up $57,000 or $63,500 if over fifty. That amount can be made in pre-tax, after-tax, or Roth. In addition, the plan can be customized to satisfy the safe harbor regulations providing each participant with a minimum 3% safe harbor contribution.

Tax and penalty free loan

Unlike most Solo 401(k) plans offered by traditional financial institutions or banks, a self-directed Solo 401(k) allows participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose. The loan must be paid back over a five years, at least quarterly, and at a minimum Prime interest rate.

Custodian Controlled

$0 establishment fee

$360 annual IRA custodian fee

  • One low flat fee
  • No ongoing transaction fees
  • No account value fees
  • Fee is deducted from your account upon set-up
  • Fee is deducted in quarterly installments of $90 beginning the following calendar year

Checkbook Controlled

$999 establishment fee

$199 annual IRA custodian fee

  • One low flat fee
  • No ongoing transaction fees
  • No account value fees
  • Fee is deducted from your account upon set-up
  • Fee is deducted in quarterly installments of $45 beginning the following calendar year

All our Self-Directed IRA clients benefit from a flat annual IRA custodial fee, irrespective of account value. This is because we want all our clients to accurately report the value of their IRA accounts without being concerned that they might pay higher account value fees.

SD401(k)s: Important Terms

Pre-Tax Contributions

ou can fund your 401(k) with "pretax" dollars, meaning your contributions are taken from your paycheck before taxes are deducted. That means that if you fund a 401(k), you lower the amount of income you have to pay taxes.  All distributions would be subject to tax and a 10% early distribution penalty, if applicable.  In addition, the required minimum distribution rules would apply.

Roth Contributions

A Roth 401(k) is an employer-sponsored investment savings account that is funded with after-tax money up to the contribution limit of the plan. So long as you are over the age of 591/2 and the Roth 401(Kk) has been opened at least five years, all Roth 401(k) plan distributions would be tax-free.  In addition, the required minimum distribution rules would apply.

After-tax 401(k) contributions are just what the name implies – 401(k) contributions that are made by the employee without the benefit of them being tax deductible.  All contributions can be taken as a distribution without tax, but the earnings would be subject to tax.  In addition, a backdoor option is available that will allow one to make after-tax 401(k) plan contributions and then convert to Roth.


The IRS Form 5500, Annual Return/Report of Employee Benefit Plan, is the form used to file an employee benefit plan’s annual information return with the Department of Labor (“DOL”).  The form must be filed each year.  Most small businesses are required to e-file the IRS Form 5500-SF.  The form is used by the IRS to gather basic information about the plan as well as the participants’.  Whereas, in the case of a one participant plan, also known as a solo 401(k) plan, annual returns of one-participant plans can be filed by electronically using Form 5500-SF or completing and mailing a paper Form 5500-EZ to the IRS.

Our Services

The IRA Financial Trust Advantage

Open a Self-Directed 401(k) plan for one low price in minutes.  Gain the ability to take control of your retirement funds to invest in what you know and understand while gaining the power to make high contributions in pre-tax, after-tax, or Roth, as well as borrow up to $50,000 tax-free.

What We Offer

  • One low annual fee
  • No annual account asset fees
  • Invest in what you know and understand
  • We handle all Plan administration and record-keeping
  • We handle all IRS reporting (IRS Form 5500 & 1099-R)
  • Generate tax deferred or tax-free growth with a Roth 401(k)
  • Diversify your retirement portfolio
  • Expertise in cryptocurrency and ICO investments

It's easy—opening an account takes just minutes.

We're also here to answer questions! Don’t know which plan you qualify for? Have questions about a transaction? Our tax professionals will get back to you ASAP.

We can handle the process by phone, email, fax, or regular mail. To get started, fill out the form or call us at 1-800-472-0646. Our expert ERISA and tax professionals are on-site, which greatly reduces the set-up time and cost. You’ll be promptly assigned to one of them and they’ll help you get your self-directed retirement structure started.