If you’ve checked out the benefits of truly self-directed retirement investing and are self-employed or own your own business, there is an even better solution than a self-directed IRA: the self-directed 401(k). [If you’re not self-employed or a business owner, don’t worry, as our self-directed IRA solutions are still a great choice, and allow you to roll over any old IRAs or 401(k)s from previous employers tax-free.]
A self-directed 401(k) offers all the benefits of the self-directed IRA (including checkbook control and the ability to invest in Bitcoin while holding your own keys, as well as other alternative assets or even typical brokerage assets), but allows larger annual contributions (up to $58,000 per participant annually, depending on your income). There is no limit at all on the amount of tax-free rollovers into a self-directed 401(k) from existing IRAs or 401(k)s.
A self-directed 401(k) can also have both Traditional and Roth subaccounts.
To be eligible for a self-directed 401(k), you must either own a business or have self-employment income (even a side gig on a 1099 qualifies). You also must have no employees other than business owners and their spouses. However, non-owner employees working less than 500 hours per year do not count towards disqualifying you.
If you’re not eligible for a self-directed 401(k) because you have non-owner employees working over 500 hours annually, still get in touch with us. We can often still help with a custom-designed small business 401(k) or SIMPLE retirement plan allowing you to hold Bitcoin and other alternative assets, although it does get slightly more complicated.
If you are eligible for a self-directed 401(k), there is a one-time plan setup fee of $1995. The annual fee is $150 per year, starting in Year 2. All fees are tax-deductible business expenses. Unlike most marketing companies offering self-directed 401(k)s, we guide you though the whole process, including providing an EIN for the plan and assistance with getting a checking account, brokerage account, and Bitcoin exchange account (if you want one). We also provide all legally required annual updates to your plan through a secure online portal. Because I am a tax attorney, I can also provide tax advice throughout the process.
If you’re not eligible because you don’t own a business or have self-employment income, don’t fret! You can still do a self-directed IRA and roll over any old 401(k)s from previous employers.
Disclaimer: Vandrew LLC is a law firm which sets up the legal structure necessary to hold Bitcoin in a tax-advantaged retirement account. We are not a registered financial advisory firm or money services business (as we never direct your actual investments, which remain under your control). The practice of Vandrew LLC is limited to federal tax matters, with specific focus on IRAs and 401(k)s.