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  • Setting up a solo401K: accountant says I should seek retirement planning advisor ins

    Hi,

    I am trying to set up a individual 401K (1099 contractor-telemedicine) so that I can do Backdoor roth and my accountant says I should speak to a retirement plan administrator because he has had too many clients "get into trouble" when setting up a "generic 401K plan with a company like Schwab."

    So I wear a few different "hats" for work and have different accounts through different companies:

    1) Work currently for University as employee (W2) and have established a 457b account through Fidelity

    2) Work currently at a VA as employee (W2) and contribute to a TSP account

    3) Work currently as a contractor (1099) and want to do backdoor roth contribution.

    4) Have old rollover IRA (Schwab) and old Roth IRA (Schwab) from previous employer

    I was thinking of setting up an i401K through Schwab and have my Rollover IRA funds directly transferred to i401K and then set up a traditional IRA and contribute $6K and then convert to roth IRA at Schwab. But my accountant is advising me to seek an advisor.

    Question 1: Any advice on how to open i401K, where, and whether I should seek advisor before doing so or can I just fill out adoption agreement and wing it?

    Question 2: I also would like to contribute to i401K each year and wondering what the max contribution is assuming I max TSP "401k" contribution limit.

    Thanks for your time

  • #2


    But my accountant is advising me to seek an advisor.
    Click to expand...


    unnecessary.


    Question 1: Any advice on how to open i401K, where, and whether I should seek advisor before doing so or can I just fill out adoption agreement and wing it?
    Click to expand...


    did you read the blog posts?


    Question 2: I also would like to contribute to i401K each year and wondering what the max contribution is assuming I max TSP “401k” contribution limit.
    Click to expand...


    you should learn about solo 401ks then. all this information is on this site and the bogleheads wiki.

    Comment


    • #3




      Question 1: Any advice on how to open i401K, where, and whether I should seek advisor before doing so or can I just fill out adoption agreement and wing it?
      Click to expand...


      You will want to make sure that the custodian you choose for your Solo 401(k) will allow you to rollover old retirement plan accounts and Rollover IRAs. Not all do!

      You don't need an advisor, but you will need to ask the question to determine if a custodian is suitable for your purposes.

       

      In regard to funding your Solo 401(k). Assuming you're under 50, you can only contribute $19,000 of employee contributions total, across all plans. However, you could do employer contributions to your Solo 401(k).

      Comment


      • #4
        Peds, I count 25 words. What's gotten into you?!?!!?

        Comment


        • #5




          Peds, I count 25 words. What’s gotten into you?!?!!?
          Click to expand...


          coffee

          Comment


          • #6


            Question 1: Any advice on how to open i401K, where, and whether I should seek advisor before doing so or can I just fill out adoption agreement and wing it? Question 2: I also would like to contribute to i401K each year and wondering what the max contribution is assuming I max TSP “401k” contribution limit.
            Click to expand...


            We use fidelity.  No advisor needed.

            https://www.fidelity.com/retirement-ira/small-business/self-employed-401k/overview

            The max "employer"  contribution depends on your 1099 income after subtracting self-employment taxes.  Max "employee" contribution depends on how much you have otherwise contributed to your other accounts.

            https://www.whitecoatinvestor.com/multiple-401k-rules/

             

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            • #7
              I did read blogs and fb and that is why I was surprised my cpa was advising me to seek an advisor before opening i401k in case things go “wrong” even though I read about many on the blog and fb stating they can readily do it. I am an S-Corp and have an EIN.

              Comment


              • #8
                Yes I want to do EmployER contributions to 401k

                Comment


                • #9
                  It is true that a few people can get themselves into trouble with one-participant 401k plans. However, that is mostly people who think it is just a "bigger" IRA, when it first and foremost is a full fledged 401k plan. The most common problems are people who do not learn the most rudimentary establishment and contribution rules.

                  There is plenty of help available on this site's blog posts and forums and the boglehead's Wiki and forums.

                  We have seen time and time again that CPAs and many advisors don't have a clue when it comes to one-participant 401k plans. No point in paying to get possibly incorrect information when a little reasearh and learning go a long way.

                  I have seen a lot of forums members go from relatively clueless to a sophisticated understanding of the nuances. They then are often the ones helping newer members. Maybe you are one of those people. Take it from someone who has been there. You don't truly understand something until you have to explain it to someone else.

                   

                  Comment


                  • #10
                    Thanks for the encouragement. When I read blog posts, people just mention opening 401k and so I didn’t think much until my cpa made me second guess myself. I have been reading a lot of financial books and will have to dig into this forum and bogleheads websites. I prefer books because they are easier to look at topics instead of searching each individual conversation thread. But can’t wait to learn more. Thanks everyone for the tips. I think I can rollover my Ira to my VA tsp 401k but I figured I would open Schwab i401k anyways and I can just try to rollover your old rollover Ira to schwab. I get my laptop tonight so I don’t have to do search on my phone which has been painful. Thanks everyone

                    Comment


                    • #11
                      P.s.

                      Time to get a new accountant, too.

                      Comment


                      • #12




                        Time to get a new accountant, too.
                        Click to expand...


                        I don't know if I agree with that. First, they knew enough to say they didn't have the knowledge. That is far better than some CPAs we have seen cause serious problems. Second, the advice itself is not a bad idea for most CPA clients. Many people don't know what they don't know and don't have the resources of a WCI or other communities.

                        Comment


                        • #13





                          1) Work currently for University as employee (W2) and have established a 457b account through Fidelity

                          2) Work currently at a VA as employee (W2) and contribute to a TSP account

                          3) Work currently as a contractor (1099) and want to do backdoor roth contribution.






                           I am an S-Corp and have an EIN.


                           

                          Why do you have an S Corp for your 1099 telemedicine income? Was this at the recommendation of your CPA?

                          This is very likely a bad setup that is costing you extra money in taxes every year, increasing fees you pay to said CPA, and generally a big hassle.

                          It also makes a solo 401k significantly more complicated, and more difficult to handle on your own.

                          How much 1099 income yearly?

                          Comment


                          • #14
                            "I don’t know if I agree with that."

                            So you agree with the S-corp for small side hustle income? And the push to an advisornfor something he could easily do himself? And not having cleared out the rollover IRA one way or another to enable bdrIRA previously?

                            I mean, if he wants to stick with a guy that keeps costing him $ with poor choices, he's welcome to, but...

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                            • #15
                              S-corp set up: my colleague suggested it when I was getting hired...not my CPA. (another lesson learned)

                              Anticipated income on 1099 this calendar year: $175K or more

                              Why does it make solo 401K more complicated?

                              I have been considering another CPA anyways because he is just not readily available...I like his assistant who is available...on my financial bucket list (lower on the list).

                              I will likely just transfer rollover IRA at Schwab to VA TSP account, but I still would like to contribute to solo401K to increase my retirement contributions now that I have my side hustle and have my financial goals and values (read a lot of books since March this year and hope to save up to >20% income in retirement to make up for lost opportunities).

                              I'm a "she" not "he" FYI

                              ChicSkiier

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